A loan against a property usually involves a large loan amount, with lenders offering up to ₹15 Crores and more, and it is important to ensure that you can repay it comfortably. Since it is a secured loan, defaulting can result in lenders seizing your property to recover dues. So, it is best to be sure you are getting a good loan deal.
In order to do this, choose your lender carefully. Check for costs, customer service, and other important factors. Read on to learn how to select the best lender for your loan against property.
Research and Compare Lenders
There are many potential lenders in the market, including banks, NBFCs and housing finance companies. Proper research of their offers and features can help you find the best loan for yourself. To start with, check out their eligibility conditions.
These terms take your income, age, credit score and place of residence into account. Meeting these criteria is key to getting approval on your loan against property application. So, ensure you pass the first hurdle by checking if you qualify for the loan.
Next, check the value-added features that lenders offer. These may include door-step services for the collection of documents or loan against property insurance [EW1] that helps you get security against unexpected events. Also check the disbursal timeline, online loan management services and other facilities. This will help you shortlist lenders before you move on to the next step.
Understand the Interest Rates and Tenures
Taking a loan against your property involves pledging your beloved asset as security and getting a loan based on its value. This is why getting a loan that you are sure you can repay is key to maintaining ownership of your property and ensuring your credit score is high.
For both these reasons, evaluating your repayment terms is important. This is where the loan against property interest rates and tenures come into the picture. Check the current interest rates of lenders whose loans you are eligible for and choose the lender with the most nominal rate. After all, a lower interest rate can help you reduce your EMIs and repay stress-free.
At the same time, keep the repayment duration in mind. Usually, the maximum tenure available for loans against property extends up to 25 years. However, remember that choosing a longer tenure helps you bring down your monthly payments, but increases the total interest you owe. Keeping this inverse relationship in mind, you can calculate your potential EMIs using a loan against property EMI calculator. Then, you can choose a lender who allows you to borrow a loan for the tenure that works for your income and budget.
Evaluate the Processing Fees and Other Charges[EW2]
While most lenders these days are transparent about all charges pertaining to a loan against property, it is your interest to ensure you know what they are and when they apply. Apart from the interest rate, a loan against property requires you to pay processing fees, part-prepayment fees and foreclosure charges. While the processing fee is a percentage of the loan amount you get, the other two fees apply when you want to pay an amount over and above your EMIs or want to pay off the entire loan before the end of the tenure.
Some lenders may also require you to pay document charges for processing the paperwork, mortgage origination fees, mandate rejection charges and property evaluation charges. If your EMIs are delayed or the payment doesn’t clear, you may also need to pay bounce charges and penal interest.
All these expenses can add to the cost of borrowing, and you need to account for them and plan your repayment carefully. Remember, these charges as well as the interest rate may differ [EW3] based on whether you are taking a loan against a commercial or residential property, so review them carefully.
It is best to go with a lender who keeps all these costs low, so you can avoid unexpected financial strain while you are repaying the loan.
Evaluating lenders on all these criteria is important because the right lender for your loan against property can help you save money when you repay. So, take your time and do your research properly. You can also check customer testimonials and the ease of contacting customer support before you make your final decision.
You can make this task easy by comparing different lenders directly on the Bajaj Markets App.