If we see the current scenario, the generation casually borrows a loan for a better lifestyle. People borrow to fill needs like a car, home, to pay education fees, etc. Also, manage it properly. People also have an option to apply for loan against property online which is a feasible , safe and secure option.
There is a range of loans available in the market. A loan against property is one of them. The term that comes with a loan is the rate of interest. We can say, high rate of interest instead of the interest rate. Here LPA comes into the picture. LPA is undoubtedly cheaper than a personal loan. Let’s discover the things that we must know before applying for a Loan against property.
As the name suggests, Loanee can have a loan against the property. The amount of a loan decides as per the value of the property. As the lender gives it against the immovable property, it is known as a secured loan. Lenders pay out 60-80% of the market-rate as a loan. Property should be on the applicant or co-applicant name. Chances of default by loanee decrease as loans are against immovable property, and hence the interest rate is low. The bank allows long tenure of up to 15 years to repay a loan.
Let’s discuss things one must take care of before applying for LAP
Actual value of property
It is essential to know the actual cost of your property. Hence you can get a loan of your desired amount. Every property has its uniqueness and value as per the age, locality, reputation of the builder, reputation of the area, size. Owning a property in a decent locality will help you to get a loan.
Eligibility criteria differ from lender to lender and customer to customer. It is necessary to understand eligibility criteria to avoid default during tenure, also for a successful application and, to get the loan. This effort will help you to get your desired amount of loan and reduce the chances of rejection.
Various lander and interest
Interest rate is the thing that affects your pocket a lot more. Hence, it is necessary to check and compare the interest rate offered by the different lenders. Never forget to check about additional charges. Some lenders will provide a low-interest rate along with many other fees.
Also, focus on charges described below.
Process fees are simply application fees. It is a fee to manage the administration expenditure like a charge for carrying out credit checks, property appraisals, etc.
Statement charges :
The lender provides interest statements, principal statements, loan statements. These statements help one to monitor the status of the loan. Statement charge includes printing charges and charges for sending these statements to you. One can avoid this by the switch over online loan management.
EMI Bounce Charge :
If you pay EMI through check and that check bounces due to insufficient funds, one will raise EMI Bounce charges for themselves. One has to pay an additional fee of around Rs. 1000 with the EMI of that particular month.
If one fails to pay EMI on time or face default over a loan, one has to pay penal interest. This charge is over the rate of interest, and the lender calculates it monthly. It is beneficial for the borrower to preplan EMI and pay on time.
If one has excess funds, one may do part-payments to repay the loan faster. As this part-payment affects the lender, the institution may charge for part-payment.
Foreclosure is paying the whole loan in one go and that also before lapsing of the tenure. That may raise the charge for one. Again take care while taking a loan. Choose a loan with low or null Foreclosure Charges.
Secure fees are for protecting one’s account, transactions, and sensitive information.
Consultation is that while taking a loan, don’t just pay attention to low-interest rates. Check and calculate installments and all types of charges.
The need for the loan
Sometimes, one is not able to calculate the need for a loan. One always has to compute the necessity of the amount. The next thing that one should calculate is the monthly expense and installment per month. It will create a clear idea of financial capacity. According to that, one should apply for a loan. And all you need to know about mortgage loan.
Be Aware: other benefits and services
The lender may offer a service that adds value to your loan. That can make your experience better and beneficial. This service includes finding the right property, guidance technicalities, etc. One can have more benefits from a loan by being aware of services.