Tips for Getting the Best Deal on Your Loan Against Property

Introduction

Do you own a property? It can be anything, a 400 sq. ft. house, a villa, a plot of land, or a commercial property. If yes, then consider yourself financially secure. Because owning a property in today’s world is an asset indeed and can come in handy when in need of financial assistance. It can be for business expansion, children’s education, weddings, or even a medical emergency. In such scenarios, a loan against property can really help you out.

Loan Against Property allows you to mortgage your property to avail a loan. Since you’re mortgaging your property as collateral, you’ll get a higher loan amount and interest rates can be pretty attractive too. Here are some tips for getting the best deal while getting a loan against property.

Evaluate Your Property

Once you decide to take a loan out of your property, the first and foremost thing you want to do is evaluate your property. You can do so by comparing prices of similar properties in your locality or by hiring a professional property evaluator. Also, remember that higher the value of your property, higher will be the loan amount you will get.

Keep Track of Your Credit Score

Credit score is the three-digit number that determines your trustworthiness to the lender. It is based on credit history including the number of debts you’ve taken earlier, repayment history, and number of bank accounts you have. Most lenders will have a minimum credit score requirement before handing over loans. If you can manage to maintain a high credit score, you will get attractive interest rates and flexible tenures.

Negotiate Interest Rates

Another shopping hack you might want to use while taking out a loan against property is negotiation. Yes, you read that right, loan against property interest rates can be negotiated. If you’re in an existing relationship with a lender, leverage it to get better terms, i.e., better interest rates and flexible tenure. If you have a strong credit score, stable income, and a high-valued property, do emphasize it and the lender will surely consider it. Because financial institutions do value long-term and valuable relationships.

Assess Loan to Value Ratio

While opting for a loan against property, after the evaluation process is complete, the lender will offer a percentage value of the property as a loan. The ratio of the loan amount offered to the value of the property is called the Loan to Value ratio. Choose the right Loan to Value ratio basis the required loan amount.

Read the Fine Print

The terms and conditions of the loan agreement is one of the most important and ignored documents by borrowers. Before signing it off, go through it with a keen eye. This document carries details of all the hidden charges like processing fees, legal fees, valuation charges, etc., associated with your loan. Some lenders tend to include property insurance along with the overall cost. If you have any queries about the agreement, please clarify them with the lender before signing the agreement.

Choosing the Tenure

The biggest number is not always the perfect number. The right tenure varies from individual to individual based on their EMI payment capacity. Do not just choose the highest tenure possible. It is not wise to lengthen the loan unnecessarily when you can close it earlier. Just try and find the right balance between the EMI amount and tenure. While discussing tenure, also collect details of the prepayment options and penalties associated with it. Because you never know when you can hit the jackpot and when it does you don’t want to have a loan hanging around you.

Keep Documents in Place

While taking a loan against property, it is important to ensure that you have the necessary documents like property papers, income proof, and identity proof to speed up and streamline the loan process. If it is a joint ownership property, all the owners should be on the same page to avail the loan. Not having all the necessary documents will prolong the process or even result in the termination of the loan application.

Lookout for Special Offers

Always have a lookout for special offers on interest rates. Festive occasions often bring out special deals. Capitalize on them to get the most out of your loan.

Seek Professional Advice

Financial professionals like auditors have been in the market for a long time and know the market inside out. Seeking advice from them will ensure you get the best deal possible. It will also prevent you from making wrong decisions. There will be certain tax benefits that you can discuss with your auditor to benefit from it. You can also seek legal consultation if you’re not sure about the terms and conditions or to get a clearer picture of the loan agreement.

Let’s Wrap Things Up

In conclusion, to secure the best deal on a loan against property, thorough research, proper negotiation, and careful consideration of the tenure and interest rate are necessary. Having a high-value property, a strong credit report, and understanding the intricacies of the agreement goes a long way too. Last but not least, do not hesitate to take professional help if you need it. By following these tips, you can effectively leverage your property and harness the most benefits out of it while minimizing unnecessary costs.

If you’re looking for a trusted financier who can support your financial needs, you’re in the right and bright spot on the internet. Chola Finance is the right place to be. We provide all kinds of loans like vehicle loans, home loans, loan against property, personal loans, consumer durable loans, small and medium enterprises loans, and business loans. Contact us at our Toll-Free number 1800-102-4565 or walk into one of our 1360+ branches across the country.