Published on Dec 31, 2019Updated on Dec 5, 2023
Loans against property are secured loans that have become very popular. These are essentially multi-purpose loans that individuals can receive from banks and lending institutions by using a currently owned property as collateral. Depending on the value of the property and the lender’s policy, you can obtain up to 40-70% of the market value as a loan . Both residential and commercial properties can be considered as collateral, providing that you have all the necessary documents. If you are considering taking mortgage loans against property here are some factors you should keep in mind.
The interest rate you will be charged on your loan against property will vary on a number of factors, including your income, loan amount, tenure, credit history and can also vary from the banking institution or lending service you choose. When you are considering obtaining a mortgage loan against property, you should ensure that you are getting the most affordable offer for your asset. You need to spend some time doing your research to find a bank or lender that will offer you an affordable rate of interest. While small differences in interest rates may not seem like much, it will greatly affect your ability to repay the loan in the long run.
For loans against property, the amount of loan you can get mainly depends on just the market value of your property. Usually one can get anywhere from 40-80% of the market value of their property as a loan, depending on the lender. If you are seeking a higher loan, it is advisable to shop around and find a lender or bank that will offer you the highest possible loan amount for your property.
Most banks and lenders will offer you a flexible repayment tenure of up to 15 years . While a longer loan tenure makes your EMIs smaller, thereby increasing the affordability of your loan, you should keep in mind that a longer tenure also increases the cost of borrowing. This is because the interest on the loan is calculated in a compounding manner, so if you have a longer tenure you will be paying more in the long run.
A very important cost that borrowers often forget to factor into the cost of a loan is the other processing and other charges that come with it. Some lenders may impose service charges, prepayment charges, statutory charges, not to mention the stamp duty you have to pay to acquire the loan as per state charges. Hence it is critical that you add all those charges when evaluating the real cost of availing the loan. Such charges may seem small, but can bring about a significant change in the cost of borrowing the loan, and can affect your ability to repay the same.
A very important factor to consider is that unlike other loans, such as education or home loan, you cannot avail any tax benefits on a loan against property. You will be required to pay tax on the amount you are using to repay your loan. Hence, people at times tend to gravitate towards obtaining a home loan or an education loan for those purposes as, despite the higher rates of interest, they attract tax benefits.
SMFG India Credit offers attractive interest rates on mortgage loans against property. Apply Online today, and get in touch with a customer care representative to know more.
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