Top 5 Things to Consider Before Applying for a Loan Against Property

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09 JUNE, 2021

A loan against property has become a popular option for many individuals looking to borrow money. The high loan amount obtained from loan against property can be used towards securing several financial needs. But when it comes to loans, there are some aspects you must consider to make the process smooth. Here are 5 things you must keep in mind before applying for a loan against property.

Eligibility criteria
The eligibility criteria for a loan against property varies from one lender to another. To reduce the chances of rejection, you should understand the eligibility criteria before you apply for a loan against property. Once you find a suitable lender where their terms match your requirements, you can easily submit your loan application. Doing this helps you avoid applying for a LAP with too many lenders. It also accelerates the process of loan approval as you already match the required criteria.
Value of your property
The value of your property depends on the size, locality, age, and other such aspects of the property. Therefore, it is crucial to know the total worth of your property to estimate the loan you could get against it. In case your home has a higher value, your loan against property will most likely be approved. But ensure that you enjoy an unchallenged ownership on the property and it is free from disputes.
Interest rates for loan against property
The interest rate of any loan plays a vital role in determining the amount you will have to pay over the outstanding sum. Before settling for a particular lender, make sure you check the available options based on the interest rate. Though minor differences in the rate may not seem much, it can affect your ability to repay the loan amount in the long run. Hence, you should opt for an affordable rate of interest after considering various banks and lenders.
Repayment tenure
You will find flexible repayment tenures for a loan against property with several lenders. Kotak Mahindra Bank offers a maximum loan tenure of up to 15 years. A longer tenure leads to a lower EMI, thereby making the LAP an affordable option. However, this may lead to an interest rate burden in the long term. While you may opt for a longer repayment term, you should also consider the fact that a longer tenure increases overall interest outgo.
Income tax benefits
Unlike home loans, taking a loan against your property doesn’t offer you any income tax benefits. You will have to pay taxes on the repayment amount of your loan. But in case you are using the borrowed funds for a new residential home or towards your business, then you can claim some tax benefits. The tax benefits depend on the end-usage of the loan amount.

You can consider the above-mentioned points while availing a loan for a hassle-free process. To get benefits of a lower interest rate, simpler eligibility and seamless application and servicing, apply for a loan against property from Kotak Mahindra bank, today.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

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