Most people are debt-averse and so the natural response is to reach into one’s savings to generate funds for a big expense. However, financial advisors suggest that this isn’t a healthy approach as you are exposing yourself to financial risk of a different kind when you do so. The best option when you are at the cusp of making a large spend is to opt for a loan. A secured loan like a loan against property can be of great help as it offers an ample amount at a competitive rate.
To better understand how this loan can work for you, here is all you need to know about a loan against property in India.
Lender-specific eligibility criteria
Before applying for a loan against property, you need to ensure that you are eligible for it. Every lender has varying loan against property eligibility criteria and the approval of your loan will depend on whether you meet them or not. This, coupled with the loan against property documents required are vital to any application. Typically, the criteria are as follows.
- You must be aged between 33 and 58 years
- You must be a salaried individual working for an organisation
- You must own property in a major city in India
You also need meet the minimum annual salary criteria. However, this figure varies from one lender to another and is based on the city you reside in.
Features of a loan against property
A loan against property is a great way to borrow because you pledge security, and in return can enjoy a competitive interest rate. Along with a heavy sanction, this loan has no spending constraints. This means that you can use it to fund any financial need, be it personal or business-led. The tenor for this loan generally goes up to 20 years, giving you enough time for stress-free repayment.
Factors that affect the loan sanction
By understanding the factors that affect your sanction, you can ensure you get the best deal. When deciding on an amount, lenders consider four elements of your application: the property’s registration, the property’s market value, your income and your eligibility. Try to better your candidature by working on these 4 factors.
Points of caution when borrowing via a loan against property
Keep these points in mind for a smoother application and borrowing process.
- When pledging collateral, if more than one name is on the title deed, then all the individuals must be co-applicants for the loan
- In case you default on your payments for an extended period of time, the lender has a legal right to confiscate and sell your property to recover the outstanding amount
- You cannot sell the property that is pledged as collateral until the loan is cleared in full
Additionally, when borrowing, it is typical to simply accept the first offer you receive. However, if you’ve got a stellar credit history and healthy finances, it makes sense to scout for the best deal from a lender that also offers excellent service. Look beyond the lowest interest rate and consider additional benefits as well.
Additional Read: How Loan Against Property Beneficial for Higher Education