Mortgage loan against property has seen a stable and upward growth. And the segment is expected to see even more appreciation in the coming days. This is a type of secured loan in which you, as a borrower, can mortgage your home or any other property and take out a loan against it. The amount you can borrow depends upon the value of your property. You can get, on an average, 40 to 60 percent of the value of the property, as loan.
Here are some easy tips to get the most out of your property deal.
Tips To Follow While Taking Out A Loan Against A Property
Life is unpredictable. You may have to face an emergency at any point of time. Most emergencies associate financial crisis. When you need a large amount of money, a loan against property (LAP) would be the best.
Let’s have a look at the following pointers before you sign on the agreement.
- Don’t Borrow Beyond Your Capacity
Unless you have the facility to repay the loan through Easy Monthly Installments (EMIs) for many years to come, you shouldn’t borrow any amount beyond your financial capacity. The basic rule of thumb suggests that the monthly EMI for a loan must not surpass 60 to 65 percent of the borrower’s net taxable income. Most nationalized as well as private banks offer LAP for an average of 40 to 60 percent of the property value. Make sure you have required financial capability to pay off the amount you are borrowing. If the EMI amount eats up a good chunk of your monthly income, you may have to compromise on other financial targets like retirement plans or children’s education.
- Choose A Shorter Duration
LAPs are often available with tenure of a maximum of 15 years and that, in most cases, makes it really tempting to go for a lower EMI. But in long run, it may require you to pay much more in interest than you would have repaid for a loan with shorter duration. Even if it is not presently possible for you to take a loan with lower tenure, you can ask the bank to increase the EMI amount each year in line with you increasing income. The shorter your loan tenure is, the less loan burden you’ll have.
- Make Payments On Time
Apart from non-payment penalties, untimely payment can negatively affect your credit score. Besides, it can also leave you with a hefty interest on the unpaid amount. And that can diminish your likelihood to getting another loan. Be disciplined and punctual in repaying the loan.
- Buy Insurance With Big Loans
If you are going to take a big property mortgage loan, it is highly recommended that you get adequate insurance coverage. In case of a mishap, this would reduce the burden on your family. It is likely that your bank will provide you with a term cover equaling to the unpaid amount. However, you can also opt for a regular term plan.
These are just a few of many useful tips you may follow to ensure getting the best loan against property deal and avail it easily from www.bazaarmoney.com/home-property-mortgage-loan-funding-india.php