Finance

Things to Consider Before Applying for Loan Against Property in Hyderabad

IT and pharmaceutical industries have a strong foothold in Hyderabad, which was once the capital of the much larger Andhra Pradesh state. Today, Hyderabad is one of India’s fastest-growing IT marketplaces and the work environment there is excellent. The city has offices of Google, Microsoft, and Facebook and owing to these IT developments, the property prices have sky-rocketed in Hyderabad in the recent past. If you are a property owner in Hyderabad and need funds immediately, you can use your property and avail of a loan against property. 

About Loan Against Property

A loan against property is a type of secured loan that has grown in popularity. These are essentially multi-purpose loans that individuals can obtain from banks and lending organisations in exchange for collateralized ownership of an existing property. Depending on the property’s value and the lender’s policy, one can borrow up to 40% to 75% of the market value. Both residential and commercial properties may be used as collateral, provided that all required documentation is in order. 

Factors to Consider

However, to maximise the benefits of this type of financing, examine the following six factors before taking out a loan against property in Hyderabad.

Eligibility Criteria

The eligibility conditions for a loan against property are significantly different from those for unsecured loans (personal loans), where an individual’s income determines the eligible loan amount. While the qualifying requirements for a loan against property vary by lender, some elements are taken into account by all. These factors include the applicant’s income, savings, and repayment history. This repayment history covers payments on credit card balances, prior loans, and so on. Additionally, the property’s market worth is considered. Further, the applicant’s job position, age, and financial stability are considered before approving the loan amount. However, company owners and self-employed professionals may have a greater age of maturity, close to 65 years.

Interest Rate

The interest rate charged on your loan against property amount will vary depending on a variety of factors, including your income, loan amount, term, and credit history, as well as the financial institution or lending service you pick. When choosing a mortgage loan secured by real estate, you should confirm that you are receiving the most reasonable offer possible for your asset. You should spend some time researching banks and lenders to discover one that can provide you with an inexpensive rate of interest. While modest changes in interest rates may appear insignificant, they have a significant impact on your capacity to repay the loan in the long term.

Loan Amount

When it comes to loans against property, the amount of money you may borrow is mostly determine by the LTV or market value of your property. Typically, a borrower can obtain a loan between 40% and 80% of the market value of their home, depending on the lender. If you want a larger loan, it is prudent to look around for a lender or bank that will provide you with the maximum loan amount feasible for your home.

Repayment Tenor

The majority of banks and lenders will offer you a payback period of up to 15 to 20 years. While a longer loan period reduces your EMIs, boosting your loan’s affordability, you should bear in mind that a longer loan tenor also raises your borrowing cost. This is because interest on loans is compound, which means that if you have a longer-term, you will end up spending additionally in the long run.

Charges For Processing

A significant cost that consumers sometimes overlook when calculating the cost of a loan is the various processing and other fees associated with it. Certain lenders may levy service fees, prepayment penalties, and statutory fees, in addition to the stamp duty required by the state to purchase the loan. As a result, you must include all of these fees when calculating the true cost of the loan. These costs may appear insignificant, but they can significantly increase the cost of borrowing the loan and impair your capacity to repay it.

Tax Benefits on Loan Against Property 

A crucial point to recollect is that, unlike other types of loans, such as school or housing loans, a loan against property does not qualify for tax benefits. You will be tax on the total amount use to repay your loan. As result, individuals occasionally lean toward acquiring home or education loan for such objectives since they qualify for tax benefits despite higher interest rates.

In India, numerous non-bank financial companies (NBFCs) provide excellent interest rates on loan against property secured by real estate. Apply online today and speak with a customer service representative for further information.

Summing Up

Generally, lenders prefer that their customers maintain employment status until the loan is completely pay off. This is why maximum age of maturity for loan secure by real estate for salaried individual is 60 years. Defaulting on a LAP’s loan payment entails risking losing the property you’ve borrowed against. Therefore, if you are planning to avail of a loan against property, you must plan your finances well. 

 

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