Tips to Get an Affordable Property Loan Interest Rate

A loan against property can be of great use in times of a financial crisis. Since this type of loan comes with zero end-use restrictions, the borrowed amount can be used for ‘n’ number of purposes – be it for funding your child’s higher education, a wedding, business expansion, or medical emergencies. One of the best features that add to its benefits is the property loan interest rate. Being a secured loan, a loan against property offers a relatively cheaper rate of interest. In this article, we discuss some tips on how you can further reduce your interest rate. 

6 Ways to Lower Property Loan Interest Rates

Many lending institutions offer property loan interest rate ranging from 8.25% to 15%. However, if you wish to get your hands on the most affordable rates, here are a few things you need to keep in mind.

Aim for a Solid Credit Score

Credit or CIBIL score depicts a borrower’s creditworthiness and repayment capability. Having a good credit score makes you eligible for lower mortgage loan interest rates because the lender sees you as reliable and risk-free. Most lenders ask for a score of 725 and above before offering a loan against property. If your credit score is below the average, you should look for ways to improve the same – clear your debts, credit card bills and outstanding loans, and avoid payment defaults. 

Make a Larger Down Payment 

One smart way to reduce the interest burden is to opt for a higher down payment. If your stake in the property concerned is higher than the lender, he/she will consider reducing the rate of interest. While most lenders require you to pay at least 20% of the property’s purchase price, it would be better if you go a little beyond that. Remember, the larger the down payment the lower the property loan interest rate. This, eventually, will cost you less money. 

Evaluate Your Property 

The age, location, and overall condition of the property is a crucial factor in determining the rate of interest. A newly constructed residential property with all sorts of modern amenities situated in an urbanized area will attract far better mortgage loan interest rates than an old and rusty property located in a dingy, underdeveloped area. 

Opt for a Shorter Loan Tenor

The property loan tenor is yet another important factor influencing the rate of interest. While opting for a longer tenor may seem convenient considering the easy, affordable EMIs, it will cost you a higher interest in the long run. On the other hand, if you choose a shorter tenor, you monthly instalments may be slightly heavy but the overall LAP loan interest rates payable will be reduced significantly. So, be prudent when deciding on the property loan tenor. 

Be Regular with Your Prepayments 

Making prepayments periodically is one of the sure-shot ways to lower LAP loan interest rates. The EMI consists of two parts – one is the rate of interest charged on the amount borrowed and the other is the one charge on the principal amount. As a borrower, you pay more towards the interest during the initial days of your repayment schedule, and when you have enough funds in hand, you use the excess money to make prepayments. This helps reduce the mortgage loan interest rates greatly. 

Go for a Floating Interest 

A floating rate of interest varies periodically with the changing market rates as opposed to a fixed rate of interest. Since this type of property loan interest rate is directly dependent on the market, the rate is typically 1-2% lower than the fixed rates.  That is why many borrowers find it convenient as a lower rate of interest means saving more money. If the floating rate ever increases, even then borrowers need not worry because it is a temporary situation and it does not affect the entire duration of the loan halkalı escort tenor. 

To sum it up, there are multiple factors that determine the property loan interest rate. Hence, it is always better to compare different rates offered by different lenders online and then settle for one that suits you best. Also, it may be a good idea to use a mortgage loan calculator to evaluate the loan tenor, interest rate and EMI options before finalizing a plan.

Discuss the various aspects with your chosen lender, check your loan against property eligibility criteria and then apply online to get your loan approved faster, that too at the best interest rates!

Borrowers seeking a credit at short notice can avail a loan against property. A property loan is a type of secured loan that requires a long-term financial commitment. Today, most financial institutions offer loan against property to salaried individuals and business owners. To avail of a property loan, potential borrowers mortgage their residential or commercial property.

How to apply for a loan against property?

Potential borrowers can follow the following steps to apply for a property loan:

  • Visit the lenders website and go to the loan against property section.
  • Fill up the online loan application appropriately.
  • Wait until a representative from the lender gets in touch with you. It normally takes around 24 hours.
  • Receive approval notification via email or call.

Features of a loan against property

The detailed features of a loan against property are mentioned below:

  • Substantial loan amount: Initially, the amount available against mortgaging a property is a lump sum amount. Borrowers can use this fund to invest in their business or meet medical, educational or marriage expenses.
  • Minimum documentation: As this is a type of secured loan, lenders require minimum documentation for it. Only some basic paper works of the existing property are needed, which gives way to quick approval and faster processing.
  • Competitive interest rates: Certain factors like the condition of the property and presence of good communication and basic amenities nearby impacts the interest rate. Furthermore, borrowers’ financial status and credit score also determine LAP interest rates.
  • Flexible tenor: Lenders generally offer an extended loan repayment tenor for a property loan. One key benefit of a long-term loan is that borrowers can easily repay the amount without getting drained out financially.
  • Loan against any property type: There are different types of loan against property. It is not mandatory for borrowers to only mortgage residential properties. However, most lenders consider residential properties to be more valuable.

Furthermore, a loan against property has very nominal eligibility criteria.

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