5 Things To Consider Before Applying For A Loan Against Property


A loan against property is a secured loan that you take by mortgaging your property. Well, it has a lower interest rate than personal loans. That is the main reason for their widespread popularity.

You can easily take a LAP loan from any bank. It doesn’t matter whether you are salaried or self-employed. However, if you are applying for the first time, you need to keep certain things in mind.

Things To Keep In Mind While Applying For LAP Loan

The Value Of Your Property

It is the single most vital factor that decides your loan amount. Lenders usually provide around 60 -70% of your property’s value as a loan. So, you need to evaluate your property to understand how much you can borrow.

Well, your lender will consider the current market value of the property. Therefore, the potential or future value will not have any impact on your loan amount.

Your Credit Score

After your property value, the lender will consider your CIBIL score. That will give them an idea about your repayment capacity. CIBIL calculates your credit score based on several factors.

Your score depends on how punctual you have been in repaying your previous loans. Moreover, it also depends on the repayment history of your credit card bills. So, make sure you pay all your dues on time. And, do not forget to check your credit score before applying for a loan against a property.

Check All The Property Documents

You can take a LAP only against the property you own. Well, you cannot just walk to your lender and say that you own a particular property. You need to produce your title deed for that.

So, make sure that all your property documents are in place. It will increase your chances of getting the loan. Furthermore, if there is a co-owner of the property, you will have to apply jointly.

LAP Loan Interest Rate

Don’t forget to check the LAP loan interest rate before applying. The rates will vary according to the lending institution. Comparing them might help you get a lower interest rate.

The interest rate of your loan against property will determine your EMI amount and the total interest outgo. So, if you get a lower rate, it will help you manage your finances well in the long run.

Tenure Of The Loan

Loans against property have a longer repayment tenure. You can repay the loan for up to 20 years. However, it depends on the lending institution.

Knowing the loan tenure will help you plan your finances. Well, the assignment will also influence your EMI and total interest paid. For example, a more extended repayment period will lower your EMI amount but increase your total interest outgo. In contrast, a shorter tenure will require you to pay higher EMIs. But, your total interest payments will decrease.

Final Word

A loan against property can help you fulfill all your financial obligations. For example, you can use it to finance your higher education or expand your startup. Keeping these things in mind will help you get a better loan.

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