Personal loans offer up to Rs. 30 Lakh. However, the loan amount you are eligible for depends on various factors like CIBIL score, income, debt-to-income ratio, etc. A 750 or above credit score is one of the significant eligibility criteria for personal loans.
You may not have such a high CIBIL score, and you may also need a loan higher than Rs. 30 Lakh.
In such cases, a property loan is the alternative financing option you can apply for. These loans are secured – You have to mortgage a property (a house) to apply for loans against property. Hence, you can receive much higher financing than a personal loan. The rate of interest is also lower, and you also get a longer repayment tenure.
Few factors that you have to consider before applying for loans against property –
The Loan Amount Depends on your Property
The amount you receive with loans against property depends on various factors of your property –
Market value
Lenders can offer loans up to 75% of your property value. The amount can be 90% if the loan is up to Rs. 30 Lakh.
Condition
Financial institutions also consider the condition of your house. It must be in proper condition and maintained correctly.
Location
Your property must be within the serviceable area of the lender. Also, a place of prominence also enables you to receive a high loan amount.
Longer Tenures Make Your Emis Affordable
A loan against property comes with tenure going up to 20 years. The advantage of longer tenure, compared to shorter tenure, is affordable EMIs since the amount is high. However, longer repayment periods increase the cost of the loan – principal + interest, than shorter ones.
Consider two loans of Rs. 75 Lakh at a 12% rate of interest. The first loan comes with a tenure of 20 years and the other with a tenure of 15 years.
The first loan comes with EMIs of Rs. 82,000 (approx.) and cost of loan Rs. 1.98 Crore (approx.). The second loan comes with EMIs of Rs. 90,000 (approx.) and cost of loan Rs. 1.62 Crore (approx.).
Hence, determining the ideal tenure of your loan is essential. Using a loan EMI calculator can help you with the same.
Keep all the Documents Ready
You don’t have to provide a list of documents if you apply for a loan from an NBFC. These companies only need you to submit –
- Documents of the property you are mortgaging.
- Bank account statements of the last 3 months.
- Latest salary slips.
- Proof of address documents.
- Income tax returns.
- Aadhaar or PAN.
NBFCs have a swift loan against property process since the documentation procedure is uncomplicated.
Companies like Bajaj Finserv are one of them that need you to submit only the above few documents. They also send a representative at your doorstep to collect the same.
Bajaj Finserv also brings you pre-approved offers that reduce time to avail a loan by simplifying the process. Pre-approved offers are available on personal loans, business loans, secured loans like home loans, and several other financial products. You can check your pre-approved offer by providing only your name and phone number.
You Can Claim Tax Benefits On The Loan-
Loans against property offer income tax benefits depending on how you use the amount.
For example, using it to construct or purchase another property enables you to gain income tax exemptions under the following sections –
- Section 80C – Exemption up to Rs. 1.5 Lakh on the loan principal.
- Section 24(b) – Exemption up to Rs. 2 Lakh on the loan interest paid.
Also, you can avail income tax deductions under Section 80E if you use the loan for educational purposes. In such cases, there is no upper limit of the dedications. However, you can only claim the benefits for up to 8 years.
Check the Part-Prepayment and Foreclosure Process-
Stretching the loan until the completion of the entire tenure unnecessarily drags the debt. Hence, borrowers prefer to take advantage of foreclosure and part-prepayment facilities during loan against property apply online. You can take advantage of these facilities to reduce the total interest payable and tenure.
Make sure you fulfill the loan against property eligibility criteria. Also, make sure that you everything about these loans before applying.
