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Mistakes to avoid when availing a Loan Against Property
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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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Looking to get a loan against property? Well, it’s a great decision as this type of loan carries several features that include quicker approval, long repayment terms, higher loan disbursement amount and more. It is offered by a large number of financial institutions around the country, making it a preferable option. Typically, the loan amount can be used for any purpose including paying for a wedding, purchasing a property and even funding your business.
If you are taking a property mortgage loan, especially for the first time, you may be overwhelmed by the several aspects that come with it. However, being vary of some common mistakes will ensure that you get through the process smoothly.
Do your research – Loan against property makes for a good way to get financial aid but you must take your time when evaluating the option. Carry out research and know of the ongoing interest rates. Additionally, go through the eligibility criteria set up by each lender. Ensure that you are offered a low interest rate and are comfortable with the other factors relating to the loan.
Present the accurate property-value – You may think that it is wise to show that your property has a greater value on the loan application. However, this is not sensible. The lender will evaluate the precise value of your property during the process. The loan amount sanctioned will depend solely on this factor. Thus, providing incorrect information on property-value can lead to rejection of your application.
Be clear on any fees and charges – There are some fees and additional charges attached as part of your loan application. Pay particular attention to the charges related to foreclosure and prepayment. If your lender levies these charges, you will have to shell-out a penalty for paying beyond your EMIs or completing the repayment before the end of the tenure.
Note your current liabilities – It is essential to consider your current financial situation that includes debt and other standing loans. In the case that you already have existing financial obligations from other loans, credit cards and more, you should make payments on time. Not being punctual with your current repayments has a negative impact on your credit score. This will thereby cause a glitch in the sanction of your loan against property. Also, your current financial liabilities will give you a clear understanding of whether you can handle another debt in the form of loan against property.
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