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Factors to Consider While Taking a Loan Against Property Financial problems are like uninvited guests because they always come at the wrong time to ruin all your plans. In such cases, Loan against Property (LAP) is the best option to capitalize your property’s financial worth to raise some funds whether it is a residential property, commercial property or a plot. A person can utilize that fund to fulfill their emergency financial needs. The biggest advantage of availing a Loan against Property is that the borrower can pay off the loan over a time period of up to 15 years. This reduces any large impact on the budget or lifestyle of a person after availing the loan. People who want to apply for a Loan Against Property (LAP) must consider the following points while taking a loan against property.
Eligibility Criteria: Loan Against Property eligibility criteria is different from one lender to another. A lender typically looks at several factors that include the borrower’s earnings, debt obligations, savings, the value of the property and previous repayment records. An individual must check all these factors from their end with the personal loan providers and other lenders before applying for this loan.
Interest Rate: Just like the eligibility criteria, the interest rate of LAP also varies between lenders. Therefore, it is advisable to always check what the lenders offer. There are some good financial service providers and advisors in the market, you can take their help to know the interest rate and other information about LAP as well.
Ratio of Loan to Property Value: Every bank or lender evaluates the ratio of loan to the property value in a different way. Therefore, it is vital to pay special attention to it and check where you are getting a better value. Different types of properties whether they are commercial properties, personal properties, etc. are valued differently and it completely depends on the lender and its policies.
Types of Charges: Aside from interest rate, there are some other types of charges such as processing fee, renewal charges, pre-payment charges, etc. typically borne by a borrower. An individual must add all these additional fees and charges before applying for a Loan Against Property.