Loan against property or Mortgage loan is one of the safest and most popular loan product among borrowers. Wonderingwhy? Well, why not! This secured loan option allows you to keep your commercial/residential property as collateral with the lender. Meaning, you can enjoy continuous ownership of your property without ever worrying about bailiffs knocking at your door! If you can’t repay the loan, sell the property to claim settlement.
Are you interested in availing this secure loan product? Take the plunge only after being fully informed. This guide will let you know the various factors that affect your loan against property interest rates.
The foremost factor that will influence not only the interest rates you receive on your LAP loan but even your loan against property eligibility is your CIBIL or Credit score. On average, it is recommended that you have a credit score that is equal to or higher than 750 to avail competitive interest rates.
If your Credit score is low, lenders may view you as a high-risk borrower and offer you higher interest rates. Moreover, if your Credit score is way below the prescribed mark, your loan application can even be declined.
Loan Applicant’s Profile
Another major deciding factor for your loan against property interest rates is your profile as a borrower. Meaning, your age, whether you are a salaried or self-employed individual, place of residence, monthly income, etc. will affect the interest rate charged to you.
For instance – If you are an elderly individual nearing retirement, the lender may charge you a higher interest rate as opposed to someone young and new to the service sector.
Moreover, the source of your income also has a say. Lenders may be unwilling to extend a loan againstproperty or may charge higher interest rates if your income is irregular and fluctuating. Similarly, salaried individuals may be charged a lower interest rate owing to their fixed incomes, whereas self-employed applicants may be charged a higher rate of interest.
Additional Read:- Difference Between Home Loan and Loan Against Property
The Property to be Mortgaged
The property to be mortgaged will also determine the interest rates charged on your loan against property, meaning, lenders will want to know the type of property that is up for a mortgage, its location, age, and condition.
For example, Commercial and residential properties are differently valued and will bear different rates of interest. Moreover, a high-value property constructed in a prime location and top-notch condition will fetch a lower interest rate as compared to worn-out ones that are too old.
The duration or tenure for which you take a loan against property will also impact the interest rate charged on it. LAP loans are long-term commitments for which you need to shelve out a fixed sum in the form of EMI (Principal loan amount + interest) every month. Naturally, the shorter the loan tenure, the higher will be the EMI amount that you need to pay. Lenders may charge you a higher interest rate if you apply for a shorter tenure as opposed to a longer tenure.
Are you looking for a reliable loan against property lender? Look no further than Tata Capital! We extend loan amounts that range from Rs. 10 lakhs to Rs. 3 crores for a tenure of 12 to 180 months with interest rates starting at just 10.5%!
Additional Read:- Top Factors That Affect Your Loan Against Property Eligibility
Use our online loan against property EMI calculator and unlock the true worth of your property today!