In India, the word mortgage loan is synonymous with loans against property, which are a type of secured loan. When a borrower applies for a loan against property, they decide to avail of their desired loan sum by pledging a commercial or residential property as security.
A few years ago, people were wary of these loans as they involve collateral. However, today, loans against property are popular and more and more people are opting for these loans.
Before we go ahead and give you tips on how you can get yourself a loan against property at low-interest rates, let us share with you the benefits that make these loans so popular.
Benefits of Mortgage Loans-
Flexible Repayment Tenor
Loans against property come with a flexible repayment tenor of up to 18 years. Borrowers who want to keep their EMIs on the affordable side can go for a longer tenor. On the other hand, borrowers who want to become debt-free soon and can afford to pay higher EMIs can go for a short tenor.
Substantial Loan Value
LAP gives borrowers the chance to avail of a substantial amount of money. For instance, Bajaj Housing Finance, under its LAP offering, offers loans up to INR 5 Crore. However, the final amount you get will depend on several factors, including your income and credit profile as well as the value of the property you wish to mortgage as collateral.
No End-Use Restrictions
Funds availed of under LAP come with zero end-use restrictions. You can use the money as you like — you can use it to pay for a medical emergency, fund a child’s education abroad, take a luxurious vacation, buy another property, etc. As long as you continue to pay your EMIs on time, no one will ask you how you are spending the loan money.
Low-Interest Rates
The biggest advantage of the mortgage loan rate of interest is that these loans are affordable. The secured nature of these loans makes them a low-risk offering for lenders. Thus, lenders charge nominal interest rates on loans against property. Currently, the loan against property interest rates starts at 9%, which is quite low.
Borrowers must, however, know that the final interest rate they get will depend on several factors, including their income and credit profile as well as the value of the property mortgaged.
If you are planning to avail of a loan against property, you must try to find yourself the lowest interest rate deal as a low-interest rate loan is easy to pay off and helps one save more money in the long run.
Tips on How To Secure a Low-Interest Rate on a Loan Against Property
Opt for a Short Tenor
When you go for a short tenor, you not only decide to before debt-free sooner but you also reduce the risk involved for the lender in lending you money. Thus, borrowers who opt for a short tenor, get lower mortgage loan interest rates. However, in your effort to reduce the interest rate on your loan against property, do not make your tenor so short that your EMIs become troublesome.
Opt for Pre-Payments When Possible
Individuals who have availed of a loan against property on floating interest rates can part pre-pay or foreclose their loan without paying any additional charges. Use this RBI guideline to your best advantage — make part prepayments whenever possible. By making part-prepayments, you will considerably reduce the total principal amount and though this will not reduce your interest rate directly, you will still be paying lesser interest on your loan.
Apply for a Lower Loan Value Than You Are Eligible For
When it comes to loans, borrowers must remember that they should borrow only what they can easily repay. Just because you are eligible for a 1 Crore loan does not mean you should apply for an equivalent value. In fact, when you apply for a loan amount lower than what you are eligible for, you convince your lender of your repayment capacity and therefore, in this case, it is quite likely that your lender will agree to sanction a mortgage loan at best terms and conditions, including the lowest interest rate possible.
Compare Offers and Choose the Best One
Planning to apply for a loan against property? Do not accept the first offer you get from the first lender you apply with. Instead, talk to as many lenders as possible. Once you have the offer from a lender, use it to negotiate with other lenders for better terms and conditions. In the end, compare all interest rates and go with the lender offering you not just the lowest interest rate but also the best features and benefits.
How a Mortgage Loan Calculator Can Help
If you are planning to avail of a mortgage loan at the lowest interest rate possible, you will need the help of a mortgage loan calculator to compare offers.
A mortgage loan calculator is an online tool that allows aspiring borrowers to calculate their EMIs for a specific loan amount. The mortgage loan calculator requires a borrower to input three values: the principal amount, repayment term, and rate of interest. As soon as you fill in these details, the calculator will give you your EMIs.
A mortgage loan calculator is a handy tool because it is quick, easy to use, and accurate. Therefore, borrowers must use it to compare offers from different lenders and figure out the offer that will work best for them.
Loans against property are a safe way to arrange money, especially in times of need. If you are planning to take a loan against a property, make it a point to use a mortgage loan calculator to compare offers and in the end, go with the lender offering you the lowest interest rates as well as added features and benefits.