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Tips to Get an Affordable Loan Against Property Interest Rate

loan against property interest rate
In: Business

A loan against property is a secured form of credit that can be availed by pledging any residential or commercial property as collateral. This credit facility has emerged as a popular borrowing option due to its high-loan amount and low-interest rates. 

Individuals can avail an affordable loan against property interest rate due to the secured nature of this credit facility. Below are the pointers that one must consider to ensure that he/she avails a competitive interest rate while applying for a loan against property. 

5 tips to avail a low loan against property interest rate 

Individuals must know that the interest rates vary from lender to lender, and so does the advantages. However, the interest rate of a secured loan is much lower than that of an unsecured loan, making a LAP a better option. One can follow these tips to avail of an affordable loan against property interest rate

  • Pledge the right property 

Borrowers must pledge a property established in a prime location with proper connectivity and basic amenities. This helps in availing affordable interest rates and even considerable loan amounts. 

On the other hand, an undermaintained property tends to attract a higher interest rate due to its lower resale value. Therefore, it is of utmost importance to mortgage the right property and benefit from its reduced interest rate.

  • Assess credit history and repayment capacity 

Lenders evaluate the credit history of a borrower before levying the interest rate. Hence, individuals must maintain a 750+ CIBIL score as it convinces the lender that they can repay without defaulting. With a high CIBIL score, lenders may provide applicants customised offers and better service terms. 

Individuals can practice habits like clearing outstanding dues, making prepayment etc., to improve their creditworthiness. 

  • Consider loan refinancing 

To avail low-interest rates on a loan against property, existing borrowers can opt for a balance transfer. However, one must check the fees beforehand. This includes the processing fee, loan terms, prepayment charges. One must go through these diligently to ensure maximum savings on his/her LAP. 

  • Choose the interest type smartly 

Individuals can choose a fixed, or floating interest rate on their LAP. They can base it upon the recent market trends and choose accordingly. As per the fixed-rate system, the interest rate remains the same throughout the tenor irrespective of the fluctuations in the market and regulatory norms. 

On the other hand, as per the floating rate system, the interest rate is adjusted according to the market fluctuations. 

However, the fixed interest rates are costlier than that of floating rates. Hence, individuals must make an informed decision based on this. 

  • Settle for an appropriate loan tenor 

One can get an affordable loan against property interest rates by opting for a longer tenor. However, choosing a longer tenor will lead to an increased interest outgo, despite reducing the burden of monthly instalments. Conversely, individuals who opt for a shorter tenor will have a lower interest outgo at the end of the tenor. In this regard, applicants can take the help of a property loan EMI calculator to compute the monthly instalments payable. 

How to apply for a loan against property? 

One can apply for a loan against property through the online mode. Individuals can follow the below-mentioned steps to apply online:

Step 1: Visit your preferred lender’s website and navigate to the ‘apply now’ section of LAP. 

Step 2:  Provide your personal and property details. These include name, age, employment status, income etc. 

Step 3: The lender will verify the documents and assess whether you meet the loan against property eligibility criteria. 

Step 4: The loan amount will be sanctioned after the documents and the said property is assessed on legal grounds. 

Additionally, opting for a reputed lender will help one avail pre-approved offers. These offers shorten the whole process and save time. Such offers are available on financial products like home loans, loans against property etc. Prospective customers can submit their essential contact details to check their pre-approved offers. 

Hence, these are some tips that one must remember to avail a low loan against property interest rate. This can help in improving the borrowing experience altogether.

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