What Are The Factors One Should Consider While Availing A Loan Against Property?


Today, you can conveniently meet various big-budget financial requirements via a loan against property. It gives you access to a large amount of funds without liquidating assets you own. All you need to do is mortgage your residential property, commercial property, land or any immovable property to avail this loan at low loan against property interest rates.

However, along with the fact that it comes with benefits like affordable loan against property interest rates, a few factors need consideration. So, before you secure this high-value finance, make sure you are well-informed about the market scenario and the factors that affect your financial capacity after you avail this loan.

Factors To Consider While Availing Loan Against Property

1.Loan Amount To Be Sanctioned

Loan against property, a type of mortgage loan, can be availed by both self-employed as well as salaried individuals. While the former can get a maximum of up to Rs. 3.5 Crore as a loan against property in India, the latter can avail this loan up to Rs. 1 Crore.

However, the maximum of this loan one will be eligible to avail depends on the mortgaged property’s valuation. Lenders calculate this amount in the form of Loan to Value ratio or LTV. It can be defined as the percentage of loan a person is eligible to avail based on the current market value of his/her existing property.

In India, this value can range anywhere between 50% and 75% of the property’s market value. It is arrived at after considering factors like the property’s age, its geographical stability, infrastructure, etc.

It is best to go to lenders who offer the maximum LTV for a loan against property. It increases the chances of availing a significant amount against mortgaged property.

2.Availability Of Repayment Tenure

While loan against property is a long term credit option, its repayment tenure may vary from one lender to another. It is advisable to go with the longest tenure as it minimises the burden of the monthly payment in the form of EMI. Longer tenure means repayable amount gets divided for a longer duration, thus reducing EMIs. From the available lenders, you may sort the ones that offer a period of up to 20 years or so. Also, if you have available funds in lump sum anytime during the tenure, you may choose to part-prepay the loan or foreclose it altogether, thus reducing the cost further.

Next comes the consideration for a loan against property interest rate.

3.The Applicable Rate Of Interest

Rate of interest is another primary concern to be pondered on. Loan against the property being a secured loan carries a lower risk for the lender. Hence, its cost of borrowing that a person has to pay is low too. Comparatively, if you avail other loans like personal or business loan, you will have to pay more in the form of interest.

Nevertheless, the interest rate charged by borrowers may differ. In that case, you need to choose the one whose loan against property interest rate is the lowest.

Lenders like Bajaj Finserv offer a Loan Against Property with an affordable rate of interest, which are the lowest in the market.

4.Quick Processing Of Application And Loan Disbursal

Situations like medical emergencies require immediate funding of large amount. At such times, loan against property comes to the rescue with its large pool of funds. Here, however, what you need to see is whether the lender you are availing this loan from offers immediate approval and quick disbursal or not. Some of the best who do so also require you to meet minimum loan against property eligibility. Apart from these, you must also consider things to avoid when availing a loan against property to ensure you get the best deal. One can also use the loan against property calculator for calculation purpose.

Additionally, some lending institutions like Bajaj Finserv provide quick and easy finance in the form of pre-approved offer. These offers are available on secured loans like home loans as well as unsecured loans like personal loans and business loans along with many other financial products.

Consider these offers along with the factors mentioned above to zero in on the best property loan. Apply for it and submit loan against property documents required. Make sure you know how loan against property is processed to increase your chances of the immediate approval.

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