Combatting large amount of debt requires a firm financial resolve and a clear strategy. While many financial advisors recommend that you clear small debts first and thereby grow in confidence, others advocate for tackling high-interest debts initially so as to keep your outgo to a minimum. On the other hand, a third segment would endorse the use of a debt consolidation loan.
When opting for this path, two qualities that your loan should have are a large sanction and a low interest rate. These ensure that you can clear the mound of existing debt in one go and repay the new one in a more affordable manner. You can seek both these qualities in a Loan Against Property. Offered by lenders such as Bajaj Finserv, this solution involves leveraging the market value of real estate you own to gain access to high-value, cost-effective funding.
How to pay off Debt with Bajaj Finserv’s Loan Against Property?
Use the Large Sanction to Tackle Debt from All Sources
Whether you’ve racked up debt from a car loan, a personal loan, a high-APR credit card, borrowings from the informal sector, or all of them put together, a loan against property can help you clear it all in a single go. Lenders usually offer funding up to 60-90% of your property’s market value and this amount can run up to Rs. 3.5 crore with Bajaj Finserv. To gain access to a handsome sanction, pledge a well-kept residential or commercial space you own as collateral.
Service your New EMIs at a Lower Rate of Interest
Consolidating your debt with a loan against property makes sense when the net cost of borrowing becomes lower. Generally, this is the case as the reassurance your lender gets with the presence of a valuable security tends to translate into a more economical interest rate. It is also the case because of the fact that pending payments attract penal charges and inflated rates, both of which are done away with when you consolidate your debt.
Additional Read: What Is Debt Consolidation And How Does It Help?
Realign your Finances towards Clearing a Single EMI a Month
When used for debt consolidation, a loan against property helps simplify repayment greatly. By offering enough funding that allows you to tackle all debt in one go, it gives you the convenience of having to service just one EMI per month. This makes for ease of budgeting, a stress-free approach to keeping track of payment dates and allows you to target all your finances to a set goal each month. By paying this new installment faithfully, you keep yourself on track to clearing your debt, one step at a time.
Opt for a Long Tenor to Get Some Financial Respite
A second way by which a loan against property aids repayment is by offering you a flexible, lengthy tenor. With Bajaj Finserv this can range up to even 20 years. This means that you get the freedom to ease the strain on your finances, should you need some respite. A longer tenor causes your installments to be split over a greater number of months, thus reducing their individual value. When planning use the EMI calculator to strike a balance between your EMI amounts and your net interest outgo. This will help you choose affordable EMIs from the word go.
Additional Read: How Debt Consolidation Helps Manage Your Finances Better?
Make Part-prepayments when You Gain Control of your Finances
Once you begin to gain an upper hand on your debt, start making part-prepayments on your loan and bring down your total interest obligation. These payments involve clearing a portion of your principal before its due date in part or in full. In the latter case the payment is called a foreclosure and in the former a part-prepayment. With Bajaj Finserv you can make part-prepayments at a 2% rate and foreclose your loan at a 4% interest charge on the amount. However, in both cases you will have to pay taxes separately over and above the final charges. Nevertheless, both these are slashed to zero for you in case you avail a floating interest Loan Against Property.
Avail a Balance Transfer to Refinance your Debt more Affordably
In the event that you have already considered a Loan Against Property with a lender other than Bajaj Finserv and realise that the cost of borrowing is lower here, consider a balance transfer. You can carry out one easily, and what’s more, obtain a top-up loan whilst doing so. This can be a profitable move, provided that the interest saved outweighs the balance transfer charges involved.
Get Access to Funding Quickly to Keep Penal Charges to a Minimum
Since a Loan Against Property is secured with real estate, your eligibility does not hinge on your credit score only. This can make for a quicker approval and disbursal. In fact, with Bajaj Finserv you can get access to the funding you seek in just 4 days.
To get on track to receive speedy financing, check your pre-approved loan offer first. Doing so will give you instant approval through a customised loan offering.
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