Choosing A Loan Against Property? Consider These Factors Before Making A Decision - Loan Trivia


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Thursday 9 June 2022

Choosing A Loan Against Property? Consider These Factors Before Making A Decision

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A loan against property has no end-use restriction and therefore is a prompt solution to deal with financial urgencies. It can be medical emergencies, weddings, higher education, business expansion, renovating homes, etc. 

Being secured, borrowers need to mortgage their legally owned properties as collateral to obtain a loan against property. This can be land, rented or self-owned home, or commercial place.

Nonetheless, prospective applicants must factor in a few pointers before applying for this credit option to make an informed decision.

What are the factors to consider before applying for a loan against property?

  • Interest rate

Individuals must compare the interest rate different lenders offer on loans against property to settle for the best deal. However, property loan interest rates also depend on the credit score of borrowers and the type of rate (floating and fixed) they choose.

  • EMIs

Depending on the principal loan amount, tenor and interest rate, applicants can get an estimation of their EMI or Equated Monthly Instalments. To do so, they can use the online loan against property EMI calculator available on the websites of all leading financial institutions.

  • Tax benefits

Loan against property borrowers can claim tax benefits under Section 37(1) for commercial purposes and Section 24(b). However, both these Sections enable borrowers to claim tax benefits only on the interest payable and not the principal amount.

Therefore, before looking to how to apply for property loan, borrowers must go through these pointers to settle for the best option.

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