3 Mistakes You Should Avoid While Availing Loan against Property

For most borrowers in India, loan against the property is the last resort. Property is one of the most cherished and respected assets in India. Therefore, it is not considered as long as you have alternate options available. That’s why, if you plan to avail a loan against property , you must avoid following mistakes. This way, you can enjoy the complete value of the property as a residence or commercial property. At a same time, you can utilise the principal amount as and when necessary. You can expand your business or educate your children. It is your call. But, use this valuable loan against property carefully. Here are three mistakes you must avoid.

Mistake #1 – Ignore your line of credit

This is very crucial while applying for a loan against property in India for three reasons.

* You cannot meet the eligibility criteria for loan against property in India with low credit score and bad credit history

* You cannot get a LAP in India if you already have taken too much credit to repay it with your active income easily

* You cannot get the best interest rates for loan against property if you are a guarantor or co-applicant on other mortgages

You need to be in a position to repay this loan with your monthly active income. Your line of credit can pose a great threat to LAP EMI. That’s why; watch out for your mortgages.

Mistake #2- Forget about LTV

You need a certain amount for business or personal reasons. That’s why most borrowers are looking for LAP. But, the trick is that you will not receive the entire value of your property as a principal amount. A select amount will be credited to your bank account. It will be based on the value of the property and the loan to value ratio. That’s why; you must ensure that you have accepted the loan that allowed you solve your problem at hand with this secure mortgage. So, find a suitable lending organization. It should be offering a suitable principal amount to meet your current requirements.

Mistake #3 – Default EMI on a loan against property

When you get a LAP in India, you must pay EMI consistently. Most people consider a LAP during a financial crisis, so it is very difficult. However, the rules about the loan repayment do not always allow you to miss your EMIs. Therefore, personal finance experts do not recommend a loan against property with unfitting interest rate. Take a loan you can afford to repay and repay it consistently. The consequences of missing EMI can be disastrous.

So, take care of your asset as you borrow against it. All the best!