Rules to keep in Mind While Taking a Loan Against Property

A loan against property is a great way to raise a significant amount for your needs. The borrowers put up their property as collateral, and the lender then provides the money by mortgaging the property at a flexible interest rate. (Checkout Interest Rates Here)

But to avail loan against property is not an easy. There are some important things you should know about this loan.

5 Rules to keep in Mind While Taking a Property Loan:

1. Consider your financial situation- The EMI, in no case, should exceed 65% of your income. Therefore one must consider their ability to repay very seriously and work out a plan that will help them in paying those EMIs without affecting their credit score.
   
2. Short tenure- The longer tenure might look attractive as the EMI is significantly less. Still, one must consider the fact that the interest increases significantly when they opt for a longer repayment time.
   
3. Timely Repayments- It is best to set up automatic repayments to avoid fines for late repayment. These repayments also help you in bettering your credit or CIBIL score. Thus these EMIs are a great way to create a good credit history. Use a Loan Against Property Calculator to get an estimate of the EMIs.
   
4. Insurance- As this is a long term loan it is in the best interest of you and your family that you have insurance. What insurance does is provide security from the loan transferred to the next of your kin in case of your demise. If your family defaults on that, the ownership will be transferred to the financial institution.
   
   
5. Terms and conditions- Read the terms and conditions for so that you are sure that this is the lender that you want to go ahead with.

Must Read: All you Need to Know about Loan Against Property Overdraft Facility