6 Mistakes to Avoid While Taking a Loan Against Property

6 Mistakes to Avoid While Taking a Loan Against Property

We often find ourselves in a scenario with a shortage of funds. An urgent financial obligation can suffer because of a shortage of funds. For example, an individual may have to stop a lengthy medical treatment due to a lack of funds. Instead of postponing any financial obligation, individuals can apply for a loan against property. However, individuals often make mistakes while applying for a loan on the property. Read on to know common mistakes to avoid while applying for a loan on the property in India.

How does a loan on property work?

A loan against property is a secured loan offered to individuals. Any existing commercial or residential space can be used as collateral to acquire a loan from the bank. Even a barren piece of land can be used as collateral to acquire a loan from the bank. Since individuals pledge immovable property with the bank to obtain loans, there are minimal risks for the lender. Similar to any other loan, individuals can return the loan amount to the lender in instalments. Once the entire principal amount and interest charge are returned to the lender, the property no more acts as collateral. A loan on the property can solve cash flow problems for individuals. Let us see common mistakes made by people while obtaining a loan on the property.

Mistakes to avoid while applying for a loan on the property

Individuals often make mistakes while applying for a loan on the property and repent it later. Once a loan is approved and, the amount is transferred to the applicant, it is irreversible in most cases. For the same reason, individuals should consider several factors before applying for a loan on the property. Some common mistakes to avoid while obtaining a loan on property in India are as follows:

  1. Not comparing the interest rates

The loan amount will be broken into EMIs for the loan holder. Each EMI will consist of some part of the total principal amount and interest charge. If the interest rate of a loan on the property is high, an individual will end up paying higher interest charges throughout the loan tenure. To avoid this, individuals can research the loan against property interest rate before submitting the loan application. To avoid repenting later, it is better to choose a bank that applies a lower interest rate on loan against property. With PNB Housing, individuals can get a loan on the property with a lower interest rate.

  1. Falling for marketing gimmicks

Many unreliable banks try to lure customers by showing lower interest rates on loans. However, the final interest rate is always high, and they hide it from the customer. The customer knows about higher interest rates and processing charges when it is too late. To avoid such a case, one should not rely on unregistered banks or financial institutions. With PNB Housing, individuals can get interest rates the same as advertised. No information will be hidden for the customers while applying for a loan against property.

  1. Not knowing the disbursal time

Sometimes, individuals need a loan on the property in quick succession. It is because people may have to meet an urgent financial obligation. However, if the bank takes too much time to process the loan, the applicant might suffer.

  1. Not ready with the paperwork

Individuals have to provide several documents to the bank to obtain a loan on the property. Incomplete paperwork can lead to the rejection of the loan application by the respective bank. Individuals should be ready with the loan paperwork in advance to avoid last-minute hassles.

  1. Not meeting the eligibility criteria

Banks have several conditions for offering a loan on property to individuals. Age limit, minimum income, minimum CIBIL score, and many other requirements are followed to obtain a loan. Individuals should know the eligibility criteria and apply for a loan only when they meet them.

  1. Choosing a higher tenure

People think they have to pay smaller EMIs for a loan with a longer tenure. However, they end up paying many times the loan amount during their tenure. For the same reason, people should choose shorter tenures while applying for a loan against property.  

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