Things to avoid when availing a loan against property

A loan against property is an ideal way forward when you require substantial fundsfor achieving personal or business targets. It offers a high loan amount and a nominal interest rates since it is a secured loan. For example, the Bajaj Finserv Loan Against Property gives you access to money up to Rs. 3.5 crore, based on the value of the property you pledge, and has benefits like easy prepayment options, flexible tenor, and quick processing. This makes a loan against propertythenew standard for long-term debt. Before you plunge in, here are a few things to avoid.

1. Misrepresenting the property value in your application

There is no point in trying to show 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 theloan easily and on time. Do thorough research and choose a lender who offers the most affordable interest rates and flexible repayment terms. Additionally, check to see the other hidden costs or fees that a lender will apply on your loan. Pick a lender that doesn’t charge you much as secure fees or eliminates the loan statement charges.

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 being offered one. A longer tenor implies that you end up paying more interest.

4. Taking a loan without negotiating with the lender

Before you take the loan, always try negotiating the terms and conditions with the lender. All charges, including interest charges or even your processing fees, can be negotiated,so focus on 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 in case 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 no or minimal charges for this facility.

6. Not preparing for a slightly longer processing time

Typically, loans against properties can take a longer time to be approved compared to a collateral-free loan. This is because thelender 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 72 hours or less, making this a convenient and comfortable option.

7. Disregarding your credit score

Just because this a secured loan doesn’t mean that your credit score is immaterial. Your credit score is an important determiner of whether you will get the loan, what your loan sanction will be, and what your interest rate will be. So, keep a regular track on 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 the loan amount can be used by you. Ensure that you read all terms and conditions so that you are not bound by any usage restrictions.

With a mortgage loan, you can enjoy benefits such as large-sized loans, flexible tenor, and quick processing. If you keep the aforementioned measures in mind, you can rest assured that you will get the most affordable loan.