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Things to keep in mind before applying for a loan against property

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Things to keep in mind before applying for a loan against property

A loan against property is often a handy way to tide over crises and other financial emergencies with ample funds. This also helps in paying for the education of children, family weddings, business establishment or even medical treatment costs. However, you should always keep a few things in mind prior to opting for a loan against property. You should clearly understand the asset in your name that will be pledged to the financial institution in return for timely funds in your hand. You should always go over your decision carefully.

Do an analysis of the overall loan affordability in order to ensure that you do not miss out on a highly valuable asset in case of non-repayment. Know the right value of the property and you can get a better deal up to 75% of the value of the same which some financial institutions may cap at 65%. You are required to fulfill some basic eligibility criteria for obtaining the loan. Lenders will examine your credit history, age, income, repayment abilities, financial responsibilities and current market value of your property. All property co-owners are required to provide an agreement with regard to the asset being offered to the lender as collateral in this regard. Keep all documents ready in advance including identity and address proof in tandem with property and income documents.

Always compare interest rates offered by several financial institutions and go for the most competitive one that you can find. Getting a better rate of interest will help you zero in on a smaller loan tenor which will help you pay off the loan swiftly. Analyse future expenses and have a repayment strategy in place. Always use an EMI calculator to work out the total amount payable every month and also throughout the entire loan tenor. Compare this to your income and other costs to make sure that repayment does not become burdensome.

Check the repayment terms and conditions very carefully while applying for a loan against property. Always look up the clauses for repayment minutely and understand the terms and conditions as well. This will help you absorb everything right away instead of identifying hidden charges later on when there is nothing that you can do about it.

 

 

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