Factors That Can Affect Your Loan Against Property

6 vital pointers you must consider before applying for a property loan -

  1. Loan amount- Your property is evaluated based on its market value, condition of the property, and its location. Financial institutions let you borrow up to 75% of the estimated price of your pledged property for loan against property. So, before the lender evaluates the value of your property, make sure you too have an accurate estimate of it.
     
  2. Long tenor- Availability of long tenors up to 18 to 20 years makes the loan affordable for many. The EMIs hence calculated are affordable and easy to meet. However, note that longer tenors increase the total cost of loan. 
     
  3. Rate of interest- Interest rates are affordable and relatively low for such high loan amount since the loan is secured in nature. Compare rates offered by different financial institutions and NBFCs before opting for a loan against property. 
     
  4. Documents- Hence for applying property loan you must have the loan against property documents ready which are mentioned below.
    ~  Copy of property to mortgage.
    ~  Last 3 month bank statement.
    ~  Salary slips (Last 2 months.)
    ~  Aadhaar, PAN card.
    ~  Income tax returns.

     
  5. Tax benefits- As per section 80C of the Income Tax Act, up to Rs. 1.5 Lakh of the loan principal paid per annum can be exempted from taxation. Avail a loan against property to enjoy additional exemptions of up to Rs. 2 Lakh under section 24(b) on the interest paid as well.
     
  6. Prepayment and foreclosure charges- Borrowers often prefer to prepay the loan amount whenever they have a surplus fund in hand. However, some financial institutions may charge an additional amount in case of prepayment or foreclosure of loan.

It is important to consider these factors before applying for a loan. It helps you pre-evaluate your financial obligations for a month. The points are a major deciding factor in whether you should or you shouldn’t apply for a loan against property.

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