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5 Common Mistakes To Avoid While Taking A Property Loan

By Runwal Group Posted On Jul 07, 2021
Category Residential properties

5 Common Mistakes To Avoid While Taking A Property Loan

To get funds to buy a commercial or residential property, you can always apply for a Loan against property or LAP. The process is not that complicated; however, borrowers often don't have much idea about property loans due to a lack of correct information and knowledge. Knowing the interest rates, applying for a loan, where to get the best interest rates and time limit of loan, etc., are important to ensure you avail of the best property loan. This blog will set a roadmap for you to get started with property loans and other significant factors.

Procedure for applying to a property loan

Procedure for applying to a property loan

The application process for a loan against property is simple. But only when your documentation is all in place. You can do it either online or offline. The brief process is as follows:

  • Fill the LAP loan application form
  • Submit all mandatory documents, attest them if required.
  • Ensure everything is accurate to the best of your knowledge for smooth due diligence and verification by the lender.
  • Evaluate your property with the market circle rates.
  • Once all this is done, and documents are submitted, a letter of loan approval will be sent.

 

Eligibility and prerequisites for property loan approval

Eligibility and prerequisites for property loan approval

Keep all the necessary documents handy for the due diligence of the lenders. Once the required documents are examined and labelled as authentic, you become eligible for loan approval from private lenders or banks. Apart from the documents, you must fulfil these criteria as well:

  • The borrower must be a major, i.e., above 18 years
  • Must be an Indian citizen
  • Should have regular monthly income with at least Rs. 25,000 earning
  • Good credit score

Want to know whether you're eligible for a loan against property or not? Use online LAP eligibility calculator https://www.myloancare.in/home-loan-eligibility-calculator/sbi

 

Common mistakes to avoid while taking LAP

Common mistakes to avoid while taking LAP

Not comparing rates of interest

According to Paisabazar.com, the interest rates for property loans can vary a lot. Starting interest rates are at 8.4%, which can spike as high as 14.5%. This fluctuation in interest rates is dependent on the property value and borrower's profile. So, it is advisable to compare the LAP interest rates to have better clarity.

Not paying attention to detail

It must be a set rule to read the documents carefully before agreeing to the terms of the loans. Since a lot of times, there are details in the loan deed that you don't want to miss, such as:

  • Hidden fees in processing fees as the face value of the processing fee is generally 1%. However, a closer look at it will reveal that there is a chargeable cap on the maximum processing fee.
  • Terms of prepayment of loan regarding the tenure and instalments allowed
  • Certain important clauses such as penalties on default of loan or clauses to allow the lender to change conditions of the loan.

Not making a repayment plan

To have a smooth repayment of the loan, you must chalk out a debt repayment plan. You have to consider the interest along with the principal amount, or else a non-payment of either may lead to an extra burden of penalties imposed on you by the terms of the agreement.

Not meeting all prerequisites for loan approval

You must meet all prerequisites to get your loan application approved. You must get the documentation right as well to meet the eligibility standards. Or else your property loan may get rejected. Solution: Do a simple eligibility check via online calculators like this https://www.myloancare.in/home-loan-eligibility-calculator/sbi

Not taking into account the tenure and EMI

Keeping a balance between EMI and the tenure of loans is important. However, most lenders may offer a property loan for up to 15-20 years. However, you must try to keep your tenure as low as possible to eliminate any extra interest than needed; As the more years you take to settle your loan, the more interest you will have to pay.

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