Need to Mortgage Your Property? First Watch Out For These Things!
Whether you are a salaried professional or businessman, there will always be targets that need to be achieved. These targets could either be personal or meant for business, and to achieve them, you might require financial support. Now, an effective way to cover the cash flow requirement is to apply for loan against property. Since this loan requires borrowers to provide collateral, you can get a high loan amount at a good interest rate. To make matters easier, there are many lenders that offer borrowers flexible repayment tenures, simple prepayment alternatives, and quick processing time too.
However, before going ahead and getting this mortgage loan, there are a few things that a borrower needs to be careful about. Making mistakes while taking such a loan could cause a problem in the future when it is time to repay the loan. To avoid any problems, take a look at 3 mistakes that you need to watch out for:
- Choosing a long repayment tenure even though you can repay the loan sooner
Most borrowers try to opt for the longest tenure that the lender is offering. The reason they do this is so that the monthly instalments are in smaller amounts, making repayment easier. However, do keep in mind that the interest of the loan adds up with each passing instalment. Therefore, if it is manageable, choosing a short tenure and cutting down the number of monthly instalments can actually help in bringing down the interest you pay on the loan.
- Opting for a loan plan without focusing on the interest rate
Different financial institutions will have varying interest rates on the mortgage loans that they provide. Now, a slight 0.5% to 1% change might hardly seem like a difference. However, this slight difference can have a significant impact on both the monthly instalments as well as the overall cost of the loan. This is why it is so important to find a financial institution that offers an attractive interest rate on the loan they provide. Make sure to use a loan against property calculator to understand what the monthly instalments of the loan look like after the interest is added.
- Putting an inaccurate property value in the loan application
Some borrowers try to front a higher value for their property while submitting their loan applications. The reason that they do this is to get offered a higher loan amount from the financial institution. However, there is no point in doing this, as the lender will check the actual market price of the property while reviewing the documents, which is why it is always advisable to accurately mention the property price.
Lastly, each financial institution will have its own process regarding the loan. This is why it is better to inquire with them about the loan against property documents that they require. This will help fast track the process and ensure there are no roadblocks along the way.
