Loans against property are usually very high-value lines of credit which have a repayment schedule stretching over a long tenor. Defaulting on such schemes can be detrimental since it would lead to losing the property used as a mortgage while availing of this loan.
Must Read: Mortgage Loan
Subsequently, it is important that borrowers avail the lowest interest rate on loan against property so that they can clear the credit with maximum ease.
- Tenor Length
The tenor length impacts the rate of interest since shorter tenor means the lesser risk for a financial institution. As a result, opting for a shorter tenor ensures that the total payable interest on the loan against property is lower. Also, lenders may offer lower rates of interest to borrowers who opt for higher EMI payments.
- Credit Score
Credit or CIBIL score is one of the most crucial factors that impact the rate of interest that is applicable to a loan scheme. Financial institutions generally check this score during the verification stage of a loan against property process to avail the risk factor involved in lending a specific individual.
Additionally, financial institutions also check existing debts and the income as well as repayment capability of the borrower.
- Prepayment & Foreclosure
Prepayment can be partial or for the whole remainder loan sum. In the case of the latter, it is known as foreclosure. Both these options effectively reduce the amount paid in interest since a portion of the principal amount is being cleared with a lump sum payment.
- Balance Transfer
Another option for existing borrowers, this allows the borrower to transfer their existing loan account to a different financial institution to avail of a better rate of interest or other terms.
Lowering the interest rates on loan against property can effectively save a lot of money as EMI payment since it will reduce the expenditure over many months. Know the ways to effectively repay your loan against property to avoid missed EMI payments and defaulting on the loan.
