Key things to know before applying for a loan against property
A loan against property is a practical and flexible financing option that allows you to leverage your assets for various needs, such as expanding your business, funding education, covering medical expenses, or managing unexpected costs. Offering significant loan amounts at competitive interest rates, it is a dependable solution for securing funds.
However, understanding eligibility, the loan process, and associated costs is vital to making an informed decision. Bajaj Finance simplifies the process with competitive rates, quick approvals, and flexible repayment terms. Here are five essential factors to consider before applying for a loan against property.
1. Eligibility criteria
To apply successfully, familiarise yourself with the lender's eligibility requirements, including:
● Age: Typically, between 25 and 85 years.
● Income stability: Salaried and self-employed applicants must demonstrate steady income.
● Property details: The property should be legally clear and can be residential or commercial. Its market value determines the loan amount.
● Credit score: A score above 700 is preferred, offering better loan terms.
● Existing liabilities: Outstanding debts may impact your loan against property eligibility and amount.
2. Loan-to-Value (LTV) ratio
The LTV ratio indicates the percentage of the property’s market value that lenders are willing to finance, generally ranging between 60% to 75%. For instance, if your property is worth Rs. 1 crore, you can expect a loan between Rs. 60 lakh and Rs. 75 lakh. Knowing your LTV ratio helps set realistic expectations.
3. Loan process
Understanding the loan process ensures a smooth experience:
● Application: Submit your application with necessary documents like income proof, ID, and property papers.
● Property valuation: The lender evaluates the property to determine its market value and LTV ratio.
● Credit assessment: Your credit score and financial profile are reviewed.
● Loan approval: Upon meeting criteria, you will receive an offer letter with terms.
● Disbursement: After acceptance, the loan amount is disbursed, and the property is mortgaged.
4. Interest rates and charges
Interest rates for Loans Against Property typically range from 9% to 12% per annum. Additionally, consider these charges:
● Processing fees: Up to 3.54% of the loan amount.
● Prepayment charges: Up to 4.72% for early repayments.
● Legal and valuation fees: One-time costs for verification and evaluation.
Bajaj Finance offers competitive rates and minimal additional charges, making it an attractive option. Use the Bajaj Finserv App to calculate EMIs, track your loan, and apply conveniently.
5. Choosing the right lender
Selecting a reputable lender ensures transparency and a hassle-free experience. Bajaj Finance provides:
● Quick loan approvals and disbursals.
● Flexible repayment tenures of up to 15 years*.
● Comprehensive loan management via the Bajaj Finserv App, including tracking payments, accessing statements, and exclusive offers.
Conclusion
A loan against property is a powerful financial tool for meeting substantial funding needs. Understanding eligibility, the LTV ratio, the loan process, interest rates, and lender selection is crucial to maximise its benefits. With Bajaj Finance, you can enjoy competitive rates, a seamless process, and an intuitive Bajaj Finserv app to manage your loan effortlessly.
*Terms and conditions apply.
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