You may have to apply for a loan against your real estate at any point in your life for various reasons.
Before you apply, you must thoroughly research the market rates of interest and loan application fees applicable to these loans rates. These are high quality, and many reputed banks and NBFCs offer favourable deals on these loans.
For example, Financial institutions offer loans against property for up to Rs. 5Cr or 70% valuation of the asset with its rate of interest starting from 9%, which is one of the lowest rates offered in the market today.
Emergencies can never be underestimated, as they can invalidate all precautions taken, and LAP loans are a great savior in such cases for the assets you own. You need to repay the loan amount and interest within the repayment period, or you can sell the asset to the bank.
Factors Affecting Loan Interest Rates LAP
- Your Credit Rating – Results Of CIBIL Score
One of the key decisive factors that influence the mortgage rates and eligibility is your credit score and your CIBIL rating. A 700 plus score is an ideal score for the trusted lenders to offer you their best rate of interest, and you have the leverage to raise all kinds of funds, ensuring favorable credit terms.
On the contrary, you may consider a high-risk borrower if your credit rating is lower than 700, for which you may have to pay a higher rate of interest. If your score is even lower, there are chances that your loan application may get rejected.
Therefore, it is important to improve your credit rating before you apply for a loan against property. You must repay outstanding debt, pay invoices on time, use your credit card responsibly, and limit the number of loan requests. A CIBIL score of 750 is considered the best.
- Your Profile
You must have all the loan against property documents handy, including your income slips, financial statements, ITRs, etc., as they have a massive impact on the interest rate on your loan. Your age and your occupational details (whether you are self-employed or salaried) also make a lot of difference.
For example, an older applicant may have a fluctuating income which may lead to a higher interest rate. Or a younger candidate with fluctuating jobs can again get a higher rate of interest than a stable businessman or salaried employee.
Before applying for the LAP amount, check all your details, like your location, job profile, per month income, etc.
- The Real Estate That You Want To Mortgage
Mortgage-covered properties are valued and evaluated based on age, insurance, documentation, condition, location, etc. If your property is in the best place and in the best condition, it has higher market value and brings you lower interest rates.
In contrast, old and worn-out properties on the outskirts of town can earn you high-interest rates.
The amount of the mortgage and rate of interest charged is also determined by the type of property, whether it is a commercial, warehouse, industrial or residential. Further, its location, and year of construction, also matter.
- Type of Interest Rate Selected
There are fixed/flat and floating/variable interest rates based on the benchmark index that fluctuates from time to time. Other kinds of interests that you can choose from could be based on APR, Prime Rate, Discount Rate, etc.
Discuss the type of interest rate you choose before signing the dotted loan against property documents.
- Loan Term
Real estate loans are high-quality loans that generate significant EMI. Faster loan repayments will reduce interest payments and lower overall borrowing costs. If you want to strengthen your credit profile, you can apply for a long-term loan, making it easier to repay.
Normally LAPs are long-term loans, so you must negotiate interest rates with the lender.
Apply for a loan for real estate online, which offers a quick, easy and convenient process. Make sure you meet the eligibility criteria and work on the abovementioned factors to get the best deals on interest rates available in the market.
Carefully review all factors and evaluate the Mei using the LTV calculator. Settling for an appropriate interest rate is an integral part of your loan application. You must diligently look into it before you apply for a mortgage.