A loan against property can provide you with urgent funds you can use for any purpose. Some borrowers use the funds to sponsor an event, purchase or renovate a house, or buy a motor vehicle. Others use the loan amount for setting up a business or purchase machinery and equipment or even spend it on foreign travel.
To apply for a loan against property, also known as a loan against land property or property loan, you need to have ownership rights to a dispute-free property. Although the interest rates are lower than most other loans, you can get the lowest loan against property interest rate by keeping the following tips in mind.
Factors That Determine Loan Against Land Property Interest Rates
The interest rate of a loan against land property depends on factors like credit score, monthly income, borrower’s age and occupation, loan term, and property status. Here is a laydown of the things that assure the lowest loan against property interest rates.
Out of all factors that play a role in determining property loan interest rates, the CIBIL score comes on top. A high CIBIL score indicates that you maintain a robust credit profile and lenders will most likely feel glad to offer you the lowest loan against a property interest rate. A CIBIL score above 750 is considered the best score. Besides the interest rate, a CIBIL score above 750 also increases your loan against land property eligibility.
The Borrower’s Monthly Income, Age, and Occupation
Other than the CIBIL score, lenders also evaluate the borrower’s profile while considering the merit of the loan application. If you are a salaried professional with many years left for retirement, you can expect the lowest loan against a property interest rate. Additionally, being in a stable job will also work in your favor. The loan eligibility and interest rates of a loan against land property also depend on the lender. Some lenders offer better interest rates to self-employed professionals with a stable income source.
The loan term or tenure is another factor that impacts loan against property interest rates. Borrowers often choose a short tenure since it enables them to clear the loan earlier and become eligible for a new loan. However, choosing a short-term loan against land property can escalate the interest rate, as the higher the EMI amount, the more the risk. Hence, if you want to save on the interest cost, choose a short-term loan. If, however, you want to pay lower EMIs, opt for a long-term loan against land property.
Once the lender is satisfied with a borrower’s profile and credit score, they turn their attention towards the property. During the property inspection stage, they inquire about the health, legal status, and location of the property. A well-maintained property in a prime location fetches a higher loan amount and lower rates than an ill-maintained property in a remote location. Hence, before applying for a loan against land property, you need to conduct an appraisal of the property and determine its worth in the market.
A reliable and reputed lender, such as PNB Housing Finance, offers relaxed eligibility criteria, minimal documentation, extended loan term, flexible repayment options, and a host of other value-added benefits. When you choose the right lender for a loan against land property, getting the lowest interest rate becomes an uncomplicated affair.