One of the safest types of loans is the Loan Against Property (LAP), which can offer substantial sums of money when needed. It has simple pre alternatives, a flexible tenor, and is simple to process.
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The following are the top red flags to look out for when taking out a loan against property: –
Giving a false estimate of the value of the property on your application- The lender would have the property evaluated nonetheless, and the result would rely on the current market price. Therefore, it serves no purpose to overstate the worth of your property on your application.
Choosing a lender without first evaluating interest rates can be risky because lenders may charge different rates for loans backed by real estate. Hence, it is wise to check rates from several lenders since they will seriously affect your EMI amount and the length of the payback. Pick the loan that has the most advantageous terms for repayment, the cheapest rates of interest, and no secure fees or statement charges added to the loan amount.
All-purpose loans:
A loan secured by real estate may be used for a variety of purposes, including the purchase of machinery, funding for your children’s higher education, paying off current loans with higher loan against property interest rates, buying a new home, etc. So, choose wisely based on your needs before submitting an application for a loan secured by real estate.
Choosing a higher duration when you can repay sooner- Always bear in mind that the longer the loan’s payback time, the more interest you’ll have to pay. Therefore, consider your financial position and choose the tenor that best suits you. Do not accept a longer term just because you were offered it.
Who May Apply for a Loan Against Property: Different lenders have different requirements for LAP eligibility. Therefore, it’s important to get double the criteria in advance. These are open to both paid staff and independent contractors. However, the age range for the former is 21–68 years whereas the latter is from 28–70 years.
Both should be employed regularly and have strong credit history. Keep your credit score high because it is crucial to getting approved.
For those who are salaried, the following documents are needed:
- Bank statements for the last three months
- wage slips
- Proof of identity
- Proof of address
- Property records
- filed PAN card ITR
The necessary documentation for independent contractors are:
- Card PAN
- Proof of address
- The most recent six-month bank statement
- Proof of identity
- Business records
- Financial statements and income tax returns.
- Property records
Check the lender’s terms and conditions carefully before submitting an application for a loan secured by property, and be prepared with your paperwork.
Before you apply for a loan guaranteed by a property, you should thoroughly consider all the mentioned aspects above.
Final Word
Keeping in mind all of the 2 introduced, it is important to bear in mind that taking out a loan against property entails surrendering the title of your home to the lender until the last EMI and until the interest has already been paid in full. So it’s best to avoid utilizing LAP for long periods of time.
