When you apply for loan against property, it offers a secured loan against your commercial or residential property opportunity. While opting for LAP, you can also avail yourself of a comparatively cheaper interest rate. However, ere petitioning for the loan, there are some do's and don'ts that you must consider. Since these loans allow you to mortgage your property and let you fund a medical emergency, education or wedding, you must know its catches.
Do's:While you apply for LAP, there are some fixed doable that you must follow. These are:
• Vouching for your asset against a hefty credit option settles the property under a state of vulnerability. Hence, you should evaluate the risks before applying for LAP. However, you don't require to worry about the situation if you have your finances orderly. Besides, it's always wise to keep yourself informed concerning the worst scenario possible.
• Before picking your lender regarding a Loan Against Property, verify and compare the different offers, potential features and interest rates.
• A LAP offers a more extended tenure period to pay off the principal amount. That, in a way, automatically lessen the monthly burden of EMIs, which eventually means higher interest charges. Therefore, when you apply for loan against property, ensure to shorten the possible loan tenure period. It perhaps means to pay overall lesser interest rates.
Don'tsBesides, do's, there are some vital don'ts as well that a borrower should definitely pay attention to. These are:
• Prevent yourself from missing out on even a single EMI after the tenure begins. Otherwise, the lender will possibly charge you some late payment fees. Besides, on loan pay off, defaulting can also make your credit score drop, which later can affect your future loan borrowing capability.
• You may require a higher credit amount than the actual value of your property, but it's always safer and wiser to apply for an amount that you can smoothly repay to the lender. However, you can try to ascertain the amount and debt-to-income ratio that you can possibly keep for monthly EMI to become able to repay your loan with ease.
• Most importantly, if you want to use the credit amount to purchase a new house, under Section 80 C, you can claim up to Rs 3.5 lakh tax benefits on the interest charge. To claim a total amount of Rs. 4 lakh with tax benefits, you need to be a first-time buyer. However, if you are a business person, you can claim the fullest interest for Loan Against Property.
While an individual is about to apply for loan against property or any other loan, he/ she needs to consider and keep in mind a number of crucial factors in every possible way. Missing any factors mentioned above can cost you a hefty penalty charge, or your loan can get declined in the initial stage.