A loan against property is an ideal way forward when you require substantial funds for achieving personal or business targets. It offers a high loan amount at nominal interest rates since it is a secured loan. For example, the Bajaj Finserv Loan Against Property gives you access to funds of Rs. 5 crores or more based on the value of the property you pledge and the eligibility. It comes with benefits like easy prepayment options, flexible tenor, and quick processing. This makes a loan against property the new standard for long-term debt. But, before you plunge in, here are a few things to avoid.
1. Misrepresenting the property value in your application
There is no point in showing a higher value of your property in your loan application, as the property will be evaluated by the lender later. Ultimately, the loan amount sanctioned will depend on the actual market rate of the property.
2. Going with a lender without interest rates comparisons
Before applying for a loan against your property, you should compare the interest rates of various lenders as the interest affects your EMIs and determines whether you can repay the loan easily and on time. Do thorough research and choose a lender who offers affordable interest rates and flexible repayment terms. Additionally, check for other hidden costs or fees that a lender will apply on your loan. Finally, pick a lender that offers suitable loan terms and an affordable interest rate.
3. Choosing a higher tenor when you can repay sooner
Evaluate your financial position and choose a tenor that works best for your needs. Don’t opt for a longer loan tenor simply because you are offered one. A longer tenor implies that you end up paying more interest.
4. Taking a loan without negotiating with the lender
Before taking the loan, always try negotiating the terms and conditions with the lender. All charges, including interest charges or processing fees, can be negotiated. So focus on negotiating with your lender for getting the best deal.
5. Not paying attention to prepayment and foreclosure charges
When taking a loan, ensure that you read all the documents carefully to understand the prepayment and foreclosure charges. These charges are levied on you if you decide to make payments above and beyond your EMIs or want to repay the entire loan before the end of the tenor. Since making part prepayments can reduce your interest liability, choose a lender who offers none or minimal charges for this facility.
6. Not preparing for a slightly longer processing time
Typically, loans against properties can take longer for approval than a collateral-free loan. This is because the lender needs to determine the value of the property before sanctioning the loan. However, with Bajaj Finserv, you are assured that the entire process will be completed in a few days, making this a convenient and comfortable option.
7. Disregarding your credit score
Just because this is a secured loan doesn’t mean that your credit score is irrelevant. On the contrary, your credit score is an important factor to determine whether you will get the loan, what your loan sanction will be, and what your interest rate will be. So, keep regular track of your credit score and ensure that you pay all your dues on time to keep it high.
8. Not knowing your lender’s usage restrictions
Some lenders have restrictions on how you can use the loan amount. Ensure that you read all terms and conditions so that any usage restrictions do not bind you.
With a mortgage loan, you can enjoy benefits such as large-sized loans, flexible tenor, and quick processing. If you keep the above-mentioned measures in mind, you can be sure of getting the most affordable loan.
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