With the pandemic slowly releasing its clutch on the world and new avenues of income opening up both online and offline, the purchasing power of people is gradually being restored. Nevertheless, several financial constraints have pushed the usage of funding to limited avenues, keeping individuals cautious of overspending. It has thus posed a serious question of how to meet the increasing lifestyle aspirations and instant funding needs. The present time thus posits an impressive period for availing secured funding to meet these expenditures. Secured financing, because these advances are low on interest and come with sufficient time at hand for repayment. A loan against property is a prime example of such funding option that people who own assets can look forward to availing for both urgent and long-term funding needs.
Even though property loans are generic advances, they can be extensively useful. Their increasing popularity has primarily been due to the easy usage that lending institutions provide for these loans. Let’s check out some pertinent details related to these advances for a better grasp of what these funding options entail.
Top Features of Property Loans in India
Repayment over an extended tenure
A loan against property is a long-term advance that allows the borrower to repay as per his/her convenience. With some best financial institutions in the market, the tenure can go up to 30 years easily. This also leaves room for planning one’s finances better and enables with managing the loan appropriately while sticking to the repayment schedule.
A long tenure, however, has its downside too as it results in a high total interest accrual. It is thus wise to extend your tenure only up to optimal affordability, which you can easily determine with the help of a loan against property EMI calculator, a self-help financial tool available online.
Residential as well as commercial property eligible for collateralisation
Institutionalised lenders provide a property loan against both commercial and residential properties. This leaves the scope for choosing a suitable property for mortgaging to raise the necessary funds. While the option for choosing property remains, it is ideal to match the property to be mortgaged with the expenditure the loan would address to meet the marks of disciplined financing.
Property loans are not only long-term but also high-value advances, allowing the borrower to meet big-ticket expenditures with ease. Also, they come with zero restrictions to end-use so you may choose what type of expenditure to address with the funding so raised. Depending on their eligibility, individuals can avail financing of up to Rs.50 Crore as loan against property with reputed lending institutions in the market.
Affordable rates of interest
Property loans are designed as secured financing options backed by asset collateral. This brings down the lender’s risk of delay or default in loan recovery to a near naught. Hence, the rates on interest applicable to these loans remain in check as well. As a result, property loans turn out to be much more affordable in the long run. Use a loan against property EMI calculator to assess loan affordability based on the total interest payable and the total loan liability you need to meet.
With digitization penetrating the remotest of regions in India, lending institutions have been able to make financing quick and convenient for aspiring borrowers. With easy online applications and simplified paperwork, lenders now enable quick approval of loans only a few minutes after application.
Once a loan against property is approved, it also does not take much time for the disbursal to come by. Given that these loans do not come with specific end-use and merchant payment, and are availed for general financing, lenders transfer the loan amounts within 24 to 48 hours of approval to the borrower’s accounts.
Minimum eligibility and document criteria
To be eligible to avail a loan against property, you need to qualify only a few simple criteria and apply to the lender. These requirements span around the age, income, and occupational stability of the borrower. You need to provide supporting documents to the lender proving your eligibility to complete paperwork, which are minimal too.
The Concept of LTV and Total Financing
As a mortgage financing arrangement, a loan against property is regulated as per the LTV structure of funding. Under this, a borrower can avail only an approved percentage of the asset’s market value as financing, known as LTV or Loan to Value Ratio. In the case of property loans, the LTV can extend up to 90% of the asset’s current market price.
The maximum loan limit that the lenders provide always remains within the LTV cap. It may, however, be wise to choose a low LTV for your property loan as it reduces the lending risk of a financier. As a result, the rate of interest on these loans remain in check as well.
Balance Transfer Facility on Loans Against Property
A loan against property often comes with the balance transfer facility as well. It is a refinancing model that allows the borrower to transfer the outstanding loan principal to a new lender offering better rate of interest.
Under this refinancing option, one can avail several amusing benefits as well. For instance, all terms of the loan can be re-agreed upon. Further, it also brings an opportunity for additional financing known as top-up loan. You can further make prepayments of your advance any time before the tenure’s end and save on the total interest payable.
When applying for a loan against property, make sure to check your overall affordability of the advance with the help of an EMI calculator. Choose an EMI that suits well within your budget without straining your finances unnecessarily. Also, keep all documents required handy for a hassle-free paperwork during the loan application. You may decide on your lender based on interest rate comparison and other available features that the lender is ready to offer for an overall maximisation of financing benefits.