A loan against property can afford you a large loan at attractive interest and long payback tenures that can be used to cover financial needs such as the expansion of your business or the further education of your child. It beats a personal loan on many features and is your best bet when you are in urgent need of funds. However, before you apply for one, keep these things in mind.
1. The kind of property’s you can mortgage.
The first thing you need to know is the types of property against which you can avail a loan against property. Most lenders will allow you to avail this attractive financing option by allowing you to mortgage properties such as your own residential property, a residential property that you own and is own rent, a commercial property you own or even a plot of land.
Another important point you should note here is that the property shouldn’t be disputed. If you are not the only owner of the property then all other owners will have to provide consent of your decision.
2. Know the charges of a loan against property.
Most LAPs come with certain charges and fees. Among them is the processing fee which probably the biggest charges of them all. Most lenders will require you to pay as much as 2% of the loan amount as the processing fees. This charge is non-refundable in most cases and won’t be given back to you even if your loan application is rejected.
Other charges include document handling charges, memorandum of understanding charges, late payment charges, prepayment charges, etc. Before finalizing on a lender, always compare the extent of charges levied by the lender.
3. Find out about the documents required.
You will need to submit a host of documents to apply for a loan against property. These documents differ based on whether you are salaried, a self-employed professional or a self-employed business.
However, some of the common documents required include, things like the dully filled form, a passport-size photograph, salary slips, form 16, bank statements and the processing fee cheque.
4. Check the eligibility criteria.
Before you apply, it’s wise to have a look at the eligibility criteria. Most lenders will look at things like your income, your financial capabilities, the cost/value of your property and your credit score.
It’s wise to work on your credit score before applying. Make all credit card payments on time and stay away from defaulting on any of your existing loans. Remember to use you oldest credit card and to stay within the credit limit; doing these things will help you improve your credit score and help get your application approved quickly.
5. Consider an insurance policy if you don’t already have one.
It’s not something you want to think about, but what would happen if you passed-away midway through the loan tenure. It’s better to be prepared for such an incident by opting for a life insurance if you don’t already have. This will ensure the financial burden of the loan is easily handled by your loved ones, even in your absence.
So if you are thinking of opting for a loan against property click here, consider the above mentioned points, they will help you achieve a smooth, hassle-free loan process.