Loan against property is a secured credit form offering substantial funds against the value of the asset pledged. Since it is offered against a collateral, its interest rates are generally lower compared to unsecured lending options.
Nonetheless, availing affordable loan against property interest rates also depend on certain other factors.
Factors that affect LAP interest rate
Credit score is the foremost determinants of LAP interest rates. While this factor does not influence property loan eligibility, financial institutions usually offer competitive interest rates to reliable borrowers who have a credit score above 750.
A borrower can lower EMI payments by opting for a longer repayment tenor. However, opting for this tenor would increase the interest outgo and attract higher rates of interest.
Profile of a borrower
An individual’s age, income profile, residence have a significant impact on loan against property interest rates. Usually, young applicants with a sustainable income can avail the advance against low interest rates. However, self-employed individuals may be charged a high interest rate due to the risk factor.
The interest rate of LAP also depends on the mortgage type. A residential property located in a prime location surrounded by amenities has a higher loan value. This helps in gaining an affordable interest rate.
These factors significantly affect the loan against property interest rate.
Apart from these, one must be mindful of the loan against property eligibility requirements to ensure that they can avail the advance against the most suitable terms.