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How Can You Leverage Your Property to Get a Mortgage Loan at a Low Interest Rate - Explained!
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It could be disheartening to know that you have no money in your bank accounts when you need funds. While you can approach friends and family, they are not always a reliable source. Therefore, you must always be ready for such an emergency cash crunch situation. Though people know that real estate is a good investment, not many know it can help you during a financial crisis too. You could be delighted to know that your property can be leveraged to solve your money woes. With a loan against property, you can leverage your property and borrow money at low-interest rates to meet your varied needs.
What Is A Loan Against Property?
A loan against property is a secured loan that you can avail to meet your different needs. With a loan against property, you can arrange funds for needs like weddings, travel, higher education, business expansion, medical emergency, consolidation of debts, etc. You can pledge your commercial, residential or industrial property to borrow money. A loan against a home is an effective means to arrange funds in a short time.
Benefits of Loan Against Property
You can choose a tenure that suits your financial viability. The option of flexible tenures helps you choose the EMI as per your comfort. You can opt for a longer tenure if you want a lower EMI and a short tenure if you can afford to pay a higher EMI. However, you must know that a longer tenure would increase your interest cost and the cost of borrowing. If you want a lower EMI, you can opt for a longer tenure and then prepay the loan when possible. It would be best to check your affordability with a loan against property EMI calculator and then apply for the loan.
By leveraging your property, you can get a high amount as a loan. Typically, lenders approve a loan amount of 50-75% of the property’s market value. However, your repayment capacity, income and financial profile, etc., are also considered while determining the loan amount. Moreover, the loan amount is also dependent on the location and age of the property, neighbourhood, etc.
Since it is a secured loan, the lender offers attractive interest rates on loan against property. Lenders consider your eligibility, credit score and financial stability to determine your interest rates. Your property acts as a security against the money, reducing the risk for the lenders. Compared to other means of credit like personal loans and credit cards, you can get a loan against property at a much lower rate.
While a loan against property can help you meet your varied needs, you must know that lenders can take some time to disburse the loan amount. Your property is closely evaluated from technical and legal aspects before its value is determined. The total time to process the application and evaluate the property can take a few weeks. Therefore, you must consider your need and urgency and then proceed with application.
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