Applying for a loan against property can be a good option for an individual who is in need of a large amount of money. The money might be needed for various reasons – getting a home extension, starting a business, paying for medical bills, settling debt, or anything else. One can apply for this loan by pledging collateral to the lender. Most financial institutions offer up to 80% of the property value, and this amount can take care of multiple expenses.
However, before applying for the loan, it is very important to first be sure that you are getting a good deal. For the loan to be affordable, one needs to look at the loan’s interest rate that is offered by the lender. This is because the interest rate can have a significant impact on the monthly instalments of the loan and getting stuck with a high rate can cause financial strains. The good thing is that there are ways in which the loan against property interest rate can be brought down.
Read the following tips that can help in lowering the loan against property interest rate:
- Clear any existing debt
If you already have existing debt, it might be difficult to accommodate another loan. On the other hand, if this is the only loan on your plate, it reduces the lender’s risk. This increases the chances of the lender offering you a lower interest rate on the loan.
- Keep a high credit score
Any lender that offers loans will check the applicant’s credit score before approving their application. This is because the lender needs to be sure that the applicant will repay the loan on time. Ideally, it is best to maintain a credit score of 750 or more. Lenders often offer the best deals such as a high loan amount at a low loan against property interest rateto those with good credit scores.
- Choose a shorter repayment tenure
The tenure chosen by the borrower can also impact the interest rate of the loan. For instance, if the borrower chooses to opt for a longer tenure, lenders might offer a lower interest rate because it reduces the chances of a default. A longer tenure means that the EMI amounts would be lower, making it easy for the borrower to pay them off. You can make use of a loan against property EMI calculator to understand the tenure that will suit your budget.
- Have a stable source of monthly income
Financial institutions prefer borrowers who are employed with reputed organisations, have maintained stability, and earn a regular monthly income. This is because in such cases, the loan is more likely to be repaid without any problems. This is why lenders have known to offer good deals to such borrowers, such as a lower interest rate on the loan against property.
Therefore, a loan against property interest rate can be lowered in these few ways. Lastly, make sure to check with the lender regarding the loan against property documents that need to be submitted. Different financial institutions could have varying requirements, so it is better to be clear about them before applying for a loan.