There comes a time in each of our lives when we find ourselves in urgent need of funds; that’s when a loan against property can step in and save the day! Things like a child’s education cost, marriage expenses, starting of a new business post-retirement, expanding your current business or keeping it afloat can all be covered with the financial help of a loan against your property.
These loans provide you higher funding that a personal loan and come with longer tenures and lower interest rates as well! All this makes them the perfect option when you need lots of cash and fast. However, before you sign your name on the application form, keep these 3 pointers in mind.
1. The interest rate & processing fee.
Compare the interest rates on offer for a loan against property. Different lenders will have slightly different interest rates. Besides this, you should also compare the processing fee as this amount is a non-refundable charge that isn’t given back to you even if your application is rejected.
Most lenders provide interest rates between 9.50 and 11.60 percent per annum. As far as processing fees are concerned, most lenders charge between 1 & 2 percent of the loan amount as the processing charge, some waive off the charge completely.
2. The properties eligible for a loan against property.
You can mortgage different types of property to avail this kind of loan. Right from your residential property to a commercial shop that self-occupied, rented or vacant. Some lenders will even accept a vacant plot of land to provide you a mortgage loan.
However, you must have all the title deeds in hand and property shouldn’t be disputed. Moreover, if there are multiple owners, they will have to be in agreement with your decision to mortgage the said property, they might even have to sign some paperwork acknowledging this fact.
It’s also important that you remember that different types of property have different LTV ratios. For example, residential properties fetch higher loan amount as compared to commercial properties, the reason being that lenders feel that you will try harder to save your residence than you would to save a commercial property. That’s also the reasons why a rented property will fetch you’re a lower LTV than a residential property.
These loans provide you higher funding that a personal loan and come with longer tenures and lower interest rates as well! All this makes them the perfect option when you need lots of cash and fast. However, before you sign your name on the application form, keep these 3 pointers in mind.
1. The interest rate & processing fee.
Compare the interest rates on offer for a loan against property. Different lenders will have slightly different interest rates. Besides this, you should also compare the processing fee as this amount is a non-refundable charge that isn’t given back to you even if your application is rejected.
Most lenders provide interest rates between 9.50 and 11.60 percent per annum. As far as processing fees are concerned, most lenders charge between 1 & 2 percent of the loan amount as the processing charge, some waive off the charge completely.
2. The properties eligible for a loan against property.
You can mortgage different types of property to avail this kind of loan. Right from your residential property to a commercial shop that self-occupied, rented or vacant. Some lenders will even accept a vacant plot of land to provide you a mortgage loan.
However, you must have all the title deeds in hand and property shouldn’t be disputed. Moreover, if there are multiple owners, they will have to be in agreement with your decision to mortgage the said property, they might even have to sign some paperwork acknowledging this fact.
It’s also important that you remember that different types of property have different LTV ratios. For example, residential properties fetch higher loan amount as compared to commercial properties, the reason being that lenders feel that you will try harder to save your residence than you would to save a commercial property. That’s also the reasons why a rented property will fetch you’re a lower LTV than a residential property.
3. Remember to get insurance if you don’t have it already.
Insurance will ensure that if anything were to happen to you before you finish repaying the loan, the financial burden of handling a debt will be easier to handle for your loved ones. This is especially so if plan on mortgaging your residence. A simple term insurance should be enough to cover your debt whilst also being easy to cover as an expense.
Besides these 3 points, another thing you should do is consult a financial expert. They will be able to point out any other factors you should be paying attention to. We hope this article has been helpful,
Insurance will ensure that if anything were to happen to you before you finish repaying the loan, the financial burden of handling a debt will be easier to handle for your loved ones. This is especially so if plan on mortgaging your residence. A simple term insurance should be enough to cover your debt whilst also being easy to cover as an expense.
Besides these 3 points, another thing you should do is consult a financial expert. They will be able to point out any other factors you should be paying attention to. We hope this article has been helpful,
No comments:
Post a Comment