Saturday, September 23

Get Loan Against Property With Low-Interest Rate


Loans are one of the best ways to fulfil your immediate requirements of cash flow in tricky situations. You might also prefer loans instead of seeking financial help from friends or family.

A loan against property or LAP simply means using your residential or commercial property as the collateral for applying a loan to fulfil purposes like children’s education and business expansion. Things like location and size of your property decide its potential value and hence the amount of loan sanctioned to you.

It is preferred over other forms of loans because it generally entails lower interest rates than personal loans.

How to secure LAP with low-interest rates

LAPs generally have low-interest rates than their personal or other counterparts already; however, there are more tips and tricks to secure low interest loans against properties.

  • Rates of interest vary according to slab – for instance, a 40 lakh loan could have a higher interest rate than that for 50 lakhs. Check carefully for details and you could be surprised with the difference
  • You should also consider the tenure of payment carefully. The longer you keep paying EMIs, the more you could be paying
  • Some banks run special discounts on interest rates for select customers that hold a savings or current account with the bank. You can exploit this to get the best deal 

Customize to suit your need

Getting a loan against property is not only quick and easy, but you can also customize it according to your requirements. For instance,

  • EMI tenures can be kept the longest, say 20 years to keep the EMIs smaller in amount if you prefer it that way. On the other hand, if you have a steady cash flow and would rather want the loan to close quickly, you can opt for lower tenure and hence, higher EMIs
  • Most banks and other lenders treat this loan type the quickest – you can expect the loan dispersed to your account within a few days, often 2-4, post the clearance of your documentation, while other forms of loans take longer duration, depending on case to case basis
  • Minimum prepayment chargers – Many lenders like Bajaj Finance have very low par-prepayment charges. Some charge nothing on foreclosure. Choosing your lender carefully according to these can help, especially if you think you might get to pay it off earlier than expected

Credit history and score

Maintaining a strong credit history and CIBIL credit score can improve your chances of lower interest rates. A CIBIL score of 750 is fair while anything below is not really great – the more you move towards a score of 900, the better it gets. 

You can do this by following some simple tips as mentioned below:

  • Continue to use older credit cards – this maintains historical credit data and banks deem you worthy of good credit ratings
  • Manage debts – paying your credit card and other debts in a timely fashion is a must if you want clean and positive credit scores
  • Checking for errors in your CIBIL credit scores is a good practice since the score may be incorrect sometimes due to pending updates in your credit profile

Get the best deal

A very important factor towards lower interest rates is the service provider. You should ideally look for a trusted lender that offers you not only the lowest interest rate but also a host of other options. How can I do that, you ask? 

  • Use free online loan calculators available for free on the websites of every famous bank and lender to calculate EMIs and total interest payable. You would just need to enter basic details like age, the amount required, rate of interest etc to get instant results 
  • Compare offer documents, brochures and online offers from different lenders and pay close attention. It is not necessarily true that the lowest interest rate means the best offer! Some banks may charge a hefty fee on processing, sometimes even up to 5% of the total loan amount. On the other hand, some charge a flat fee of INR 500
  • Other fees like stamp duty, foreclosure charges etc should also be considered while making this decision 

How to be prepared 

Being ready in advance will save you time, energy and resources, while last-minute rush would only cause chaos and disturb your peace of mind.

  • Look for quick, easy and accurate documentation procedures. Keeping all property-related papers, your identity and address evidence and other relevant documents in one file for timely access is a good practice 

These tips, mixed with some research, calculation and diligence will help you in securing the best deals and lowest rate of interest on loans against property.