Property is one such asset that helps you gain numerous financial benefits. Most of us usually invest in property to make money by selling it at a higher rate.
However, some of us are unaware that owning a property can come to our rescue in troublesome situations. With the help of loan against property (LAP), you can use your house, not just for housing purpose but also in other financial crisis too.
Loan against property is secured and comes with a high loan amount that you can use to buy a home, for business expansion, or personal requirements like a loan for studying abroad, marriage or medical expenses. However, an asset is not enough to get a loan. Your income, credit history and behavior, and other factors also contribute to getting a loan against property. Therefore, before you begin applying for a loan against property to make the most out of it, follow these financial tips.
Compare the lenders on various parameters
In case of involvement of higher loan amount and long tenure, choosing the right lender for your Loan Against Property is important.so, before applying for LAP, it is important to compare and review various lenders offerings so that you can choose the lowest interest rate for Loan Against Property. You have to take a few things into account before finalizing the lender such as processing fee, prepayment or foreclosure charges, loan to value ratio and late payment penalty.
Assess your cash flows and repayment capacity before applying
Before you begin applying for LAP, make sure you assess your current finances through your income and cash outflows. Always choose a loan according to your repayment capacity and make sure to check the amount to be repaid before finalizing the loan. Your repayment capacity will be determined based on your current level of income and for (the proportion of your income you spend towards monthly installments). In case your FOIR exceed 50% of your income, then lenders may hesitate in taking you on or you are likely to be charged a higher interest rate than others. Therefore, before applying for a loan, always determine the loan amount that you can repay conveniently. Your borrowings should be aligned to your current as well as a potential financial position in the future.
Check your eligibility
Eligibility criteria for LAP will differ from lender to lender. Before applying for the loan, make sure to check your eligibility with the lenders you have shortlisted. It will eliminate chances of rejection of your loan application and ensure that you get an approval for a Loan Against Property instantly.
Check your CIBIL score before applying
A credit score is one of the most important factors which any lender consider before providing any loan to its customers. Therefore, before submitting your loan application, you must check your credit score as well as credit report, as errors in these may affect your chances. Therefore, it is important to have a credit score of 750 and more to avail a loan. Also, you are liable to earn better interest rates of loan.