Rules to Follow While Taking a Loan Against Property

Loan against property is a great financial option to cover your sudden expenses or invest in your future. However, it comes with certain risks. If not managed properly, a loan against property can lead you to lose your home. So, when applying for a loan against property (click here to know about LAP), there are certain rules that you must follow to maintain your solvency. Here are the rules:

1. Do Your Research: Before taking a loan against property, doing your research is very important. You must look at different lenders and the schemes they are offering. Compare their debt-to-value ratio, their loan against property interest rate, their eligibility criteria, and then decide. This information can make a huge difference in your monthly payments.
2. Borrow According to Your Capacity: The lender may offer you a 70% loan of the market price of your property. But this does not mean that you should take it. A larger loan amount will only increase your EMI and de-stabilize your monthly cash flow.
3. Time and Regularity: Paying your EMIs on time and regularly is of the utmost importance. Defaulting on EMIs can turn you into a defaulter and you can lose your property.
4. Pick a short tenure: Always choose a shorter tenure if possible. A longer tenure may offer you smaller EMIs but you pay more as interest.
5. Get Insurance: If you are taking a large loan amount, it is advisable to get insurance for the same. So, if an unfortunate event occurs during the tenure, your family will not have to bear the burden of the loan.

Follow these simple rules and glide through the tenure of your loan against property.

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