Things to be Aware of Before Opting for Loan Against Property from Emirates NBD

Everyone faces challenges in life – be it financial, career-related or personal. Financial problems often push us to use savings we may have put away for a rainy day. In situations like these, we can always take assistance from financial institutions or banks in a form of loans. A good option, if you have property, is to take a loan against property as this allows you to borrow more compared to personal loans.

What is a loan against property, or LAP, as it is otherwise known?

A loan against property is a secured form of a loan where your property such as a house or flat acts as a security against the money you are borrowing. This type of loan can be used for personal financing, business financing, medical emergencies and so on. Since this is a secured loan, you can often borrow a larger amount than unsecured loans.

Here are some things to keep in mind before applying for a loan against property

1. Your credit score

A LAP is a secured loan as your property acts as collateral. However, financial institutions will still evaluate your credit score before considering your application. Keeping a good credit score helps you get loans on favourable terms.

2. Other offerings in the market

The secret to choosing the best loan is to do your research. Although, you might need funds (money) urgently, it is advisable to research the best the market has to offer in terms of interest rates. Due to rising interest rates, it may benefit you to look at a longer tenure loan on a fixed interest rate.

Some factors that influence interest rates:

-Your credit score

-Loan tenure and nature of interest (variable or fixed)

-Market conditions

-Nature of the property – a newer, higher value property will always get you better terms

-Repayment capacity – your income and ability to pay back will help you get a better rate

3.Terms and conditions

It is very important to read the terms and conditions of the loan as there can be hidden fees, terms for prepayment, and clauses which may give the lender right to change the conditions of the loan. Skipping these may result in surprises and shocks which may lead you to pay much higher than what you initially borrowed.

4. Paying back

Planning out your repayment structure helps in making on time payments and not missing out on payments as these could lead to penalties. You can consider early loan settlement or partial loan settlement.

For more information on Loans against property for UAE nationals and expatriates click here.

Emirayes NBD is a Leading Bank Group in the MENAT Region