Loans against property (LAP) are secured credits that have grown immensely prevalent in modern times. These are essentially multi-purpose loans that people can obtain from banks and financial institutions by utilizing their owned commercial or residential property as collateral.
Moreover, depending on the property value and the policy set by various lending institutions, people who apply for a loan against property can get up to 40-70% of the property market value as a loan.
Things you must know before applying for a loan against property
If you are contemplating applying for a loan against property, here are some significant factors you must keep in mind.
● Understand your property value
Every real estate property, be it commercial or residential, have a set value based on their amenities and locality.
Hence, if you wish to apply for a loan against property, you must be well aware of your prevailing property rates to ensure whether it serves your purpose of taking a loan or not. Also, a property situated in a prime location and whose value is high will always expedite the loan approval process.
● Current loan against property interest rates
The interest rate charged on your LAP loan will differ on several determinants, including your earnings, loan sum, tenure and credit record. Also, the current loan against property interest rates can vary from one financial institution to another.
Hence if you wish to apply for a loan against property, you need to compare and research the interest rates offered by various financial institutions and then pick the one with the most affordable interest rates.
● Check Your Eligibility Criteria
The eligibility criteria of a LAP loan will vary from one bank to another. Hence, loan applicants must always examine the loan against property eligibility criteria of the financial institutions you plan to apply for a LAP loan.
This is because by checking your loan against property eligibility criteria, you can better understand your odds of getting a loan and further speed up the entire loan approval process.
● Check your credit score before applying for a LAP loan
Your credit rating indicates your repayment capacity, creditworthiness, and your prevailing debts. This is why banks and financial institutions always monitor closely the credit score and credit history of the loan applicant before sanctioning the loan.
Therefore, it is crucial that you verify your economic credibility and apply for a loan against property only when you hold a credit score of 750 and more. This way you can gain the trust of your lender and reduce the odds of loan rejection.
To sum up, we can say that a loan against property is a good credit option for people in need of economic assistance to fulfil their financial obligations. However, before applying for a loan against property, you should always keep in mind the points above to avoid any hassle in future.