A loan against property is gaining popularity because it is easy to use and can serve as a useful source of financing. But in order to plan and manage your finances efficiently, you must understand the charges applicable on your loan against property. This will give you a clear picture about the total cost of taking the loan, and will also help you budget for repayment.
Take a look at the various charges that are applicable on your loan against property.
Interest Rates on Loan Against Property
The interest rate is the cost at which the lender extends credit to you. It is calculated on the total amount that you borrow, for the tenor for which you are taking the loan. Interest rates on loan against property are calculated annually, and then added proportionately to each EMI.
Processing Fees on Loan Against Property
Processing fees are also known as application fees. This fee is used to cover administration costs, cost of carrying out credit checks and property appraisals, etc. This amount is deducted from the total loan amount before it is disbursed to you.
Statement Charges on Loan Against Property
Most lenders charge you for interest and principal statements, as well as loan statements that help you monitor the progress of your loan. These are sent to you in the form of a hard copy, and statement charges cover the cost of printing and sending them across to you.
You can avoid this charge by switching to online loan management, which is offered by most good loan providers. One such lender is Bajaj Finserv, which offers online loan management to you along with its Loan Against Property. You can sign into a secure customer portal, using a customer ID and password, and access all loan related statements at your convenience.
EMI Bounce Charges on Loan Against Property
If you make EMI payments by cheque and the cheque bounces due to insufficient funds, you will incur an EMI bounce charge. This means you will have to pay an additional charge of around Rs. 1,000, per bounce, along with the EMI for that particular month.
Penal Interest on Loan Against Property
If you fail to make EMI payments or default on the loan, you will have to pay penal interest. This is charged over and above the rate of interest and is calculated on a monthly basis. So, it is best that you plan for repayment in advance, to avoid having to pay such charges.
Part Prepayment Charges on Loan Against Property
If you have excess funds you can make part prepayments towards the principal to repay the loan quicker. As this affects the lender, the institution may levy a prepayment charge. Ensure that you pick a lender with a low or nil prepayment charges to make the most of this facility. When you take this loan from Bajaj Finserv, you don’t have to make any prepayment charges, if all borrowers and co-borrowers are individuals, loan availed on floating interest rates, and loan taken for purposes other than business use. However, apart from above situation part pre-payment charges are applicable for term Loan up to 4.72% (inclusive of applicable taxes) of the principal amount of loan prepaid on the date of such part-prepayment. Part pre-payment charges are not applicable for Flexi Term Loan (Flexi Dropline) and Hybrid Flexi.
Foreclosure Charges on Loan Against Property
Foreclosure involves paying off the entire loan in one payment, before the lapse of the tenor. Like prepayment, foreclosing your loan attracts a charge too. Again, ensure that the loan you choose has a low foreclosure charge, if at all, to make repayment simpler. When you take this loan from Bajaj Finance, you don’t have to make any foreclosure charges, if all borrowers and co-borrowers are individuals, loan availed on floating interest rates, and loan taken for purposes other than business use.
Secure Fees on Loan Against Property
Lenders charge a secure fee to reinforce security for your account, transactions and sensitive information in whatever manner they deem necessary. This involves protecting your online account and keeping all your data safe.
Additional Read: A step by step guide to apply for an Loan Against Property
So, when picking a loan against property, don’t pick one just by looking at a low interest rate. Use the Loan Against Property EMI Calculator to identify the instalment you are likely to pay and review the fees and charges before you take a decision.
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