Tackling a large debt requires 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 to keep your outgo to a minimum. On the other hand, a third segment would endorse using a debt consolidation loan.
When opting for this path, your loan should have two qualities: a large sanction and a low-interest rate. These ensure that you can clear the existing debt in one go and repay the new one more affordably. You can do this with a Loan Against Property. Offered by lenders such as Bajaj Finserv, this credit option involves leveraging the market value of the real estate you own to gain access to high-value, cost-effective funding.
How to pay off debt with Bajaj Finserv 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. 10.50 Crore* with Bajaj Finserv. Pledge a well-kept residential or commercial space you own as collateral to gain access to a handsome sanction.
Service your new EMIs at a lower interest rate
Consolidating your debt with a loan against property makes sense when the net cost of borrowing becomes lower. Generally, in this case the reassurance your lender gets with valuable security tends to translate into a more economical interest rate. Moreover, the pending payments attract penal charges and inflated rates, which are done away with when you consolidate your debt.
Realign your finances towards clearing a single EMI a month
When used for debt consolidation, a loan against property helps simplify repayment greatly. Offering enough funding that allows you to tackle all debt in one go, gives you the convenience of having to serve 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 instalment 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 a loan against property aids repayment is by offering you a flexible, lengthy tenor. With Bajaj Finserv, this can range up to even 15 years. This means that you get the freedom to ease the strain on your finances, should you need some respite. On the other hand, longer tenor causes your instalments to be split over a greater number of months, thus reducing their value. When planning, use the EMI calculator to balance your EMI amounts and your net interest outgo. This will help you choose affordable EMIs for your loan.
Additional Read: How Debt Consolidation helps manage your finances better?
Make part-prepayments when you gain control of your finances
Once you gain the 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 up to 4.72% (inclusive of applicable taxes) and foreclose your loan at up to 4.72% (inclusive of applicable taxes). Nevertheless, both are slashed to zero for individuals if availed a floating interest rate for loan against property and loan taken for purpose other than business use. Part-prepayment charges not applicable for Flexi Term Loan (Flexi Dropline) and Hybrid Flexi.
Avail a balance transfer to refinance your debt more affordably
If you have already considered a Loan Against Property with a lender other than Bajaj Finserv and realise that borrowing cost is lower here, consider a balance transfer. You can carry out one easily, and what’s more, you can obtain a top-up loan while 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 quicker approval and disbursal. In fact, with Bajaj Finserv, you can get access to the funding you seek in just 4-3 days after loan approval.
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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