Irrespective of why, given the infinite ways to use it, people applying for a loan against property should carefully understand all the terms involved and plan their finances thoroughly. The best way to start with it is by understanding the various mistakes which other applicants commit, and avoid committing them while applying for the loan yourself.
Don’t make a decision in haste: Firstly, as generally people do 'apply for a loan against property without comparing them'; you have to refrain from committing this mistake. No matter how much time it takes, do the basic R&D and come up with the most fitting loan for yourself.
Don’t ignore your existing liabilities: Also, your existing liabilities can increase your debt-burden ratio, which you might not realize but aren’t good for someone planning to apply for a fresh loan. A higher debt-burden ratio means a lower repayment capacity and hence, the applicant is likely to get rejected for the loan.
Remember, lowest is not always the best: This is a very common mistake committed by loan applicants, not only by those applying for a loan against property, people applying for other credit schemes are likely to commit this mistake: 'falling for the low-interest rate trap'. Any financial institution operating in India can't offer a loan at an interest rate lesser than the minimum MCLR specified by the RBI. So, whenever you find a lender offering a loan at what’s even less than the lowest interest rate available in the market, it is a red flag. Run! As fast as you can.
Bottom line: While familiarising yourself with the loan against property features, also keep the above pointers in mind to ensure a pleasant and convenient loan borrowing experience.
