Essential Steps to Consider before Applying for Loan Against Property

A loan against property is where you will receive money from the bank by mortgaging your property. It will act as a security deposit for the money that is rendered by the bank. In case, if the borrower fails to repay the loan amount, then the banks have the right to take your property.

Property is an asset which helps you gain numerous financial benefits if you choose the right option. Here are some of the factors you should be careful about:

1. Know the right value of your property

A home's value is more of an art than it is a science. It is essential to be aware of the total cost of your property to ensure that it gives you the desired loan amount. Usually, having a property in a good locality will help you receive loan approval faster.

2. Eligibility Criteria

The eligibility criterion for loan differs from bank to bank. However, you need to understand the requirements before applying for the loan. A loan against property helps you to find out the loan amount you are eligible for, based on the value of your property and monthly income.

Companies like Shubham Housing Development Finance Company (SHDFC) provides you take a loan against property with simple eligibility criteria. If you reside in a city where Shubham has an office, and your age is above 21 years of age. Apart from this, SHDFC offers you a loan with various other benefits like instant approval, the nominal rate of interest, value-added services, and minimal documentation.

3. Interest Rate

The interest rate of the loan will play an essential role in determining its affordability, and your ability to repay it. So, before you apply for the loan, it is important to compare and review various lenders so that you can choose the lowest interest rate on Loan Against Property. Also, look for flexible repayment terms as this can make repayment hassle-free.

4. Get an Estimate of the Amount that you need to Borrow

It is difficult to borrow the right amount of loan if you don't have an estimate in mind. To get clarity, make a list of the expenses that you will pay for using the loan. For instance, if you are using the funds to purchase office space, calculate the price of the selected property while adding costs for interiors etc. and then you can make a note of your financial requirements, review details like your income and usual monthly expenses. It will help you review your finances and choose a loan amount that meets your needs and caters to your financial situation.

5. No Tax Benefits

If you avail a home loan, you can avail a tax benefit under section 24b and 80c. But unfortunately, a loan against property do not attract any tax benefit for the borrower. The amount which you use in repaying your loan is considered as your taxable income.

These factors can help you select the right loan against property for your needs.

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