When you acquire a secured loan, apart from the loan against property eligibility criteria that need to be met, there are some other aspects to consider. For example, many lending institutions make it mandatory to insure your property during the term of your mortgage loan. Now, you may wonder why it is needed. You see, when money lenders evaluate the value of your property, they take into account important aspects such as location, age as well as the resale value of the property.
Although not mandatory, it is advisable to insure your property against fire, flood, earthquake and other hazards depending on where your property is located. It is mainly to make sure that there is no default on your loan. The above threats affect the property you have mortgaged.
Also Read: LOAN AGAINST PROPERTY: HERE ARE THE TOP BENEFITS
Naturally, if there is a need to make a claim, the beneficiary will be the bank or financial institution where you have applied for a loan against property. It is a safe option for both the applicant and the lender as in case of any unforeseen circumstances that damage your property, you or your family should not bear the burden of repaying the loan in a difficult time. Similarly, your lender will be satisfied with the fact that the loan will be repaid despite the destruction.
Remember that there is
no legal rule to insure your property during the tenure of the property. It is
left to the lender's discretion. However, this is mandatory with some money
lenders, and they provide similar facilities. You may have insurance paid as a
lifetime payment (usually less than 1% of your loan amount) or pay a regular
premium as part of your EMI.
Similar Read: Need Emergency Money? Loan Against Property is Best Option
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