Potential Pitfalls To Consider Before Applying For A Loan Against Property In India
A loan against property is typically used by Indian borrowers if they have an unavoidable requirement for funds. Do you need to send your son abroad for education or have a huge wedding coming up in the family? However, what one must remember about the LAP is that you are risking a property worth so much more. Although due to low interest rates, a loan against property is much more interesting and a profitable option too. The fact is; there are advantages and there are disadvantages. So, here are some of the more serious considerations before you apply for a loan against property.
Principal amount
This is a huge variable. The amount you need to pay for your child's education or wedding has almost zero bearing on the principal amount that will be provided to you. The principal amount entirely depends on the valuation of your property. This is a third party process. So, lenders conduct it independently. You cannot control it in any sense. So, if the amount is too big for the loan you need, you can decline to accept the loan against property; after paying the expenses for this property valuation.
Property valuation
What does third party property evaluation mean? The lender asks the non-partial third party to complete the process that will estimate the rough value of the property if it comes out for sale in today's real estate market. So, there are several unrelated factors that have a considerable bearing on the approval of loan against property and interest rates - such as real estate market, stock market, neighbourhood value, amenities and infrastructure nearby, demand in the market, etc.
Potential loss of ownership
You may lose the ownership of the property if you fail to repay the loan within the expected time frame. This is why loan against property in India is very unpopular; which makes it much harder to get; even when you need it. It tends to take longer for approval than a lot of other loan options against assets. However, if you areopting for a loan against a rented or commercial property, it is a far easier choice as compared to the loan against your personal residence. The risk is much higher and the loss more profound.
So, choose the right lender, EMIs and interest rates for your loan against propertyas it will be one of the most important decisions that will have a considerable bearing on your financial future.
Principal amount
This is a huge variable. The amount you need to pay for your child's education or wedding has almost zero bearing on the principal amount that will be provided to you. The principal amount entirely depends on the valuation of your property. This is a third party process. So, lenders conduct it independently. You cannot control it in any sense. So, if the amount is too big for the loan you need, you can decline to accept the loan against property; after paying the expenses for this property valuation.
Property valuation
What does third party property evaluation mean? The lender asks the non-partial third party to complete the process that will estimate the rough value of the property if it comes out for sale in today's real estate market. So, there are several unrelated factors that have a considerable bearing on the approval of loan against property and interest rates - such as real estate market, stock market, neighbourhood value, amenities and infrastructure nearby, demand in the market, etc.
Potential loss of ownership
You may lose the ownership of the property if you fail to repay the loan within the expected time frame. This is why loan against property in India is very unpopular; which makes it much harder to get; even when you need it. It tends to take longer for approval than a lot of other loan options against assets. However, if you areopting for a loan against a rented or commercial property, it is a far easier choice as compared to the loan against your personal residence. The risk is much higher and the loss more profound.
So, choose the right lender, EMIs and interest rates for your loan against propertyas it will be one of the most important decisions that will have a considerable bearing on your financial future.
