You may have taken a personal loan and utilised your credit card to the fullest to address financial emergencies. Now, you have come across a substantial debt that you may find hard to pay off.
Personal loans are unsecured, and they come with a considerably high rate of interest. Similarly, credit cards also come with high finance charges. Failure to pay the loan EMIs and credit card bill attracts a penal charge and late payment fee respectively.
Your credit score also goes down when the due date crosses. Not paying your debt for too long makes you a defaulter. You become blacklisted and will not be able to avail credit anymore.
To avoid these, you can take a secured loan with a lower rate of interest. Debt consolidation loan is one such ideal product that you can opt for.
What Is A Loan Against Property?
A loan against property is a mortgage loan sanctioned against an immovable asset. The lender keeps your property documents until you have repaid the loan in full.
One of the drawbacks of a loan against property is the lender reserves the right to seize your house and liquidate it if you default on the loan repayment. However, there are ways to ensure you don’t default on the loan and easily avoid facing such a situation.
The lower rate of interest makes these loans beneficial to consolidate debt.
Top Loan Against Property Features To Consider
Here are six features you should know.
- Prolonged Tenors To Make Emis Affordable
A loan against property tenor can stretch over 20 years. The longer tenors are beneficial to keep the EMIs lower than your current unsecured loans. Lower EMIs mean lower monthly obligations to help you manage your already strained finances better.
- Quick Disbursal To Address Financial Situations
Leading NBFCs such as Bajaj Finserv provide a Loan Against Property within four days. Hence, you can avail financing quickly without any hassle.
Bajaj Finserv also brings pre-approved offers that simplify the process of availing loans and help you save time. These offers are available on unsecured credits like business loans and personal loans, secured loans like home loans and a list of other financial products.
- Only A Few Documents Required To Apply
The mandatory loan against property documents required to apply are documents of your property and KYC documents (PAN, Aadhaar, etc.)
Others that you have to provide are latest salary slips, address proof (recent property tax or municipality tax receipts, any KYC document with your permanent address, latest utility bill, etc.), income tax returns, and bank account statement for the last 3 months.
- Only A Few Eligibility Criteria To Fulfil
You must be salaried or self-employed to satisfy the loan against property eligibility criteria. While salaried applicants have to be between the ages of 33 and 58 years, self-employed ones have to be within the ages of 25 and 70 years to apply.
- You Can Transfer The Loan To Another Lender
Some financial institutions will give you the option to transfer your loan against property debt consolidation balance to another lender. This feature is known as a balance transfer facility and helps you transfer your remainder loan to another lending institution offering a lower rate of interest.
You transfer the outstanding loan amount to another lender, pay a lower rate of interest, and enjoy more affordable EMIs.
Be advised that your current loan provider may charge foreclosure fees. Know the difference between the Fixed vs Floating Interest Rate. However, such charges may not be applicable if you are paying a floating rate of interest and no fixed rate of interest.
Use a balance transfer calculator to check how much you can save by transferring your loan.
- You Can Foreclose The Loan At Any Time
Financial institutions also enable you to foreclose your loan against property in India at any time. You don’t even have to pay foreclosure fees if you are on a floating interest rate, unlike personal loans.
However, refer to your repayment schedule to choose the right time to foreclose. Doing so too early will lead you to pay the majority of the interest. On the other hand, foreclosing at the end will not be beneficial either as most of the interest is already paid.
Compare the lenders, their rate of interest, and charges before you apply for a loan against property debt consolidation. Also, calculate your EMIs with a loan EMI calculator when you do so.