A Guide To Get Home Loan Against Property

People invest in a property either to park their money or make money out of it by selling it at a premium. And there are many ways where property comes to aid in times of need. One such way is when a property becomes a perfect collateral for a loan.

Taking a loan against property is comparatively easier than getting a loan to buy a property. Yet, there a couple of things to keep in mind if one plans to monetise property and secure a loan against it.

• Loan against property is cheaper than personal loan. Due to the collateral, there is a lot of interest savings that come with this kind of a loan. Ensure that the rates offered are much cheaper than personal loans. Make a comparison and take an informed decision.
• Make sure that there is no encumbrance to the property while taking a loan against it. If there are, no loan shall be given. Make sure it is not a disputed property and all the owners or the right holders are in agreement to the loan. This will ensure a speedy approval and disbursement of the loan is approved.
• Take advantage of the fact that a loan against property is given for longer tenure than a personal loan. For example, the tenure of a personal loan is generally between three and five years. When you mortgage a property, the tenure of the loan can be as high as eight to 10 years. Banks will consider many things before deciding on the tenure, and one of them is the age of the applicant. If possible, allow the younger owner of the property to take the loan in case the property is owned by many people.
• As your mortgage your property, you can avail of a loan of at least 70 per cent of the total value of the home. Make sure that you get your home appraised to make sure that the right value of your loan is being considered. The higher the value of your home, your net worth will be that much higher and will have an impact on the interest rate quoted to you. Ensure that the bank captures the right value of your home.
• Even if you are still in the process of repaying your home loan, your home is eligible to be mortgaged for loan against another property. However, the tenure of the repayment of your home loan should not be too long and you must have already have repaid a large chunk of your loan. This kind of loan depends on the terms and conditions of banks, yet it is possible.
• Make sure that your CIBIL and credit scores are in order without any black marks. That will have an impact on the interest rates.
• It is easier to mortgage rent-earning properties for a loan, as they are revenue-generating properties. If you hold multiple properties, mortgage the one on lease.
• Loans can be taken on vacant land parcels as well. Their value depends on the land rates or ready reckoner rates, hence might fetch lower loan than a property that is constructed.