Getting a loan against the property is one of the quickest ways to obtain immediate financial aid. As the property is considered as collateral, the procedure for such loans is straightforward. The property value is used to determine the amount of loan. Property mortgage loans are generally approved in short times and thus considered as one of the most reliable methods by real estate owners. Here are five important rules to follow while availing loan against property.
Calculating the loan amount as per financial capability
Financial organisations provide 50% to 90% of the property value as the final loan amount. Although a large amount can be obtained from mortgage loan against property, the borrowers are advised to consider their repayment capacity before applying for loan against land.
You can calculate the EMIs on the loan amount, to evaluate the monthly outgoing amount. If this amount manageable as per your monthly budget, you should apply for the same amount of loan against property.
Selection of the tenure
Selecting a longer tenure decreases the amount of EMI. However, the payable interest increases with time. Therefore, people taking a loan against land are generally advised to keep the tenure as short as possible. The financial institutions offer tenure of 5 to 20 years on mortgage loan property typically. Keeping the tenure short will help you to release your property faster as well as decreases the payable interest.
Being punctual while paying EMIs
While getting a loan against property, your property comes under higher risk when you delay the EMIs payments. Late payment fees are charged on overdue EMIs payment, which makes you utilise additional money in that month. Delay in EMI payment also affects your credit score, which gets recorded in your credit report. Moreover, irregularity in paying EMIs, in turn, increase the interest on the loan, which eventually disturbs the financial planning of the borrower. However, you can avoid all of this and get your property back in time by simply being punctual while paying EMIs.
Getting loan insurance
Getting insurance on a loan is one of the most reliable ways to save your family from financial burdens resulted from misfortunate events. You may already know that the higher the loan amount, the bigger the risk. Besides, one cannot predict the future. For example, in case a borrower encounters unemployment or worse untimely demise, the liability of loan falls on his/her family. The loan insurance comes to aid in such instances as they provide the funds required to repay the loan EMIs, which eventually protects the property from getting seized.
Careful evaluation of documents
You must thoroughly check all the documents regarding loan against property. These documents are often lengthy. However, you must understand all the terms and conditions mentioned in them regarding details like processing fees, pre-payment charges, late payment penalties, etc.
The process of getting a mortgage loan against property becomes simplified when following the above rules.