While pledging your collateral can give you access to a substantial sum at affordable interest rates,
It is important you take extra care to maintain your ownership of the collateral. This requires timely repayment. To make your borrowing experience an easy one, you must pay attention to a few important details before applying for a loan against property.
Here are 5 things to consider before you take a loan against property.
The market value of the collateral
By checking the current market value of the property you wish to pledge, you can gauge how much of a sanction you would be applicable for. Typically, the loan-to-value ratio for a loan against property is between 60% and 80%. Use this information to your advantage and get your property evaluated beforehand. Know exactly what you can get and negotiate with the lender for suitable terms.
Lender’s loan against property eligibility criteria
Before applying for a Bajaj Finserv Loan Against Property, you need to make sure that you have met all the lender-specific eligibility criteria. Failing to do so will result in a rejection and this will reflect badly on your credit history, making it harder to get future loans. Typically, lenders require you to be a salaried individual aged between 33 and 58. You must work in a reputed organisation or MNC and must own real estate in any of the major cities in India. Additionally, you must also meet the minimum annual income amount but this amount varies according to the lender and the city you reside in.
As you will notice, the criteria are simple. Similarly, the loan against property documents required are easy to produce, but just as important. These include your PAN Card, Aadhaar Card, bank statements and the title deed, apart from a few other documents that your lender may ask for.
Charges and fees applicable on a loan against property in India
Before you decide on a loan against property offer, ensure to check all the charges involved as these will determine the overall affordability of your loan. To give you a clearer picture of what to expect, here is a list of fees you must keep an eye out for.
- Loan processing fee
- Loan, principal and interest statement charge
- Mortgage origination fee
- Penal interest rate
- EMI bounce charges
While some of the fees only apply when you default, it is still good to know beforehand. This way there are no surprises and you can opt for a different lender if the rates are not to your liking.
The loan against property fine print
An important task to carry out before applying for any loan is to read the fine print. This means knowing about hidden charges, extra fees for foreclosure, terms, involved and others. Always check with the lender about their policy and conduct your own research before taking any decisions. It isn’t uncommon for borrowers to be blindsided by fees that weren’t mentioned during the application process.
Additional loan features to benefit from
Features that are offered as a part of the loan against property add immense value to your borrowing experience. For example, the loan against property offers the Flexi Hybrid feature that enables you to borrow from a pre-approved sanction whenever you need to. You only need to pay interest on the amount you utilise. This feature is especially useful when you don’t wish to overborrow while being prepared for unexpected expenses.