A loan against property is a type of secured loan that allows you to pledge your property as collateral with the lender and avail a loan amount against the same. With leading lenders, you can easily avail a loan against property at competitive rates and favourable terms. The lower your interest rate, the lesser will be your repayment burden. Thus, it’s essential that you learn about the factors affecting your loan against property interest rates. Some of them are mentioned below:
- Your income and job profile
Your monthly income determines your repayment capacity. Thus, if you have a high monthly income, lenders may consider you as a low-risk applicant, and this can help you avail an attractive interest rate on loan against property. Moreover, your job profile and employment stability may also play a crucial role in deciding your loan against property interest rate.
- Credit score
Your credit score determines your creditworthiness. A good credit score of 750 or above can boost your loan eligibility. This can not only improve the chances of your loan approval but also help you negotiate with the lender to avail a competitive interest rate. Thus, before applying for a loan against property, you must take proactive measures to boost your credit score. You can improve your credit score by clearing your outstanding dues, decreasing the credit utilization ratio, and having the right credit mix.
- The property being mortgaged
In case of a mortgage loan, the property being mortgaged also determines the rate of interest. The type of property, i.e. commercial or residential, its location, age, and condition play a crucial role in determining the interest rates. For instance, a high-value property in a prime location will fetch a lower interest rate as compared to an old worn-out property.
- Loan tenure
The tenure of your loan will directly affect the interest rate charged by the lender. For a short-term loan, the lender may charge you a higher rate as compared to a long-term loan. Moreover, your monthly instalments will also be higher in case of a short-term loan. However, by paying off the loan sooner, you will be able to save on the interest payout and bring down the total loan cost.
Since, loan against property is a secured loan, defaulting on it can cost you your property. Hence, it’s advisable to make timely repayment of the loan amount by paying monthly instalments regularly. To get an estimate of your EMIs, you can make use of an online EMI calculator. This will help you settle for an affordable EMI and make repayment easier.
A loan against property is a multipurpose loan, and hence, the loan amount can be utilized for various purposes such as starting a business, managing children’s higher education, funding an international trip, etc. Moreover, these loans have a lower interest rate as compared to personal loans and gold loans. So why wait? Apply for a loan against property and meet your financial requirement with ease at the earliest.