A Loan Against Property can be of great help when you require a large amount of money. It is basically a secured loan, wherein you can mortgage the property to the lender in order to borrow the loan amount. Since it is a multipurpose loan, the loan amount can be utilized for various purposes such as funding your child’s higher education, managing his/her wedding expenses, etc. In case you wish to apply for a Loan Against Property to fulfil your monetary requirements, ensure to avoid these critical mistakes as they can cost you dearly in the long run.
Avoid These Mistakes before Availing a Loan Against Property
- Not checking your loan eligibility
Your loan application will be approved only if you satisfy the eligibility criteria set by the lender. You can check your eligibility using a home loan eligibility calculator. Not checking your loan eligibility before applying for a Loan Against Property can lead to the rejection of loan application. Lenders usually check your age, income, existing EMIs, credit history, and the current value of your property to decide on your loan eligibility. Moreover, for processing the loan application, you would be required to submit documents such as age proof, income proof, address proof, property documents, etc. To ensure a smooth loan application process, ensure to check the loan eligibility beforehand and keep all the necessary documents handy.
- Not evaluating your repayment capacity
You must not forget that a Loan Against Property is a secured loan wherein your property acts as collateral. Thus, if you fail to repay the loan amount within the stipulated time, the lender reserves the right to seize your property to recover the loan amount. To avoid this, it’s better to apply for a Loan Against Property only after evaluating your repayment capacity. Also, do not overborrow, as it can be financially burdensome at a later stage
- Not choosing the loan tenure wisely
It’s advisable to settle for a loan tenure that works the best for you. However, opt for a shorter tenure if you foresee an increased income in near future, or you can afford to pay back the loan sooner. A shorter tenure attracts a lower interest cost.
- Neglecting your credit score
Your credit score not only enhances the chances of loan approval but also makes you eligible for a competitive interest rate and favourable loan terms. A credit score of 750 or above is considered to be good enough by most lenders. Therefore, do not ignore the importance of a high credit score and work towards improving it before applying for a Loan Against Property. You can boost your credit score by clearing outstanding dues, having the right credit mix, and decreasing your credit utilization ratio.
- Not checking the prepayment and foreclosure charges
The prepayment facility would allow you to close the loan sooner and save on the interest pay-out. However, lenders usually levy a foreclosure charge in case you prepay your loan. Ensure to read the prepayment clauses and charges set by the lender before applying for a Loan Against Property.
At Kotak Mahindra Bank, you can easily avail a Loan Against Property up to Rs 5 crores, and with minimal prepayment charges. The application process is online and hassle-free. Apply for a Loan Against Property and take care of your monetary needs with ease, today.
