What are the Factors Affecting a Loan against Property?

Posted on Monday, March 18th, 2024 | By IndusInd Bank

A loan against property is a versatile financial tool capable of addressing a wide range of financial challenges. It is crucial to consider key factors such as property valuation, credit score, interest rates, and eligibility criteria. Unlock substantial funds for major expenses like business setup, education, or debt consolidation with a loan against property from IndusInd Bank.

Reaching important milestones in life often demands a substantial financial investment. Perhaps you wish to expand your business, pay for higher education abroad, or need to consolidate debt. In such times the property you own can be a valuable asset. It allows you to secure the necessary funds without disturbing your savings or liquidating existing investments.

Since this is a secured loan, institutions offer you lower interest rates, and you get a large loan amount with a longer repayment tenure. These advantages have fuelled the Indian loan against property market, which is set to have an expected CAGR of over 14% in value terms over the next three years. Several crucial factors come into play when securing a loan against property and the terms of the loan offered to you. Let us take a closer look at some of these factors.

Factors Affecting a Loan Against Property

1. Property Valuation and Loan Amount

The value of the property being offered as collateral is an essential consideration for lenders when granting a loan against property and will affect the loan amount you will be offered. Financial institutions employ expert appraisers to assess the property’s value. The property’s valuation directly influences the Loan-to-Value (LTV) ratio. You can borrow up to 60-80% of the property’s market value.

2. Loan Against Property Interest Rate

One of the most critical factors that will affect your loan against property is the interest rate. This significantly impacts the overall cost of borrowing. This rate is influenced by factors like the lending institution, loan tenure, credit score, and market conditions. Comparing interest rates offered by various lenders and negotiating with them can help you secure the most favourable rate.

3. Eligibility Criteria

Loan against property eligibility criteria are set by lenders to evaluate your ability to repay the loan. Factors like your income, credit score, and property type are considered when determining your eligibility.

4. Loan Tenure

A loan against property usually comes with a flexible tenure, allowing you to choose a repayment period that suits your financial situation. A more extended tenure can reduce your monthly EMI, but it may result in higher interest payments over time. Shorter tenures come with higher EMIs but result in lower interest costs.

5. Credit Score

Your credit score is a crucial determinant of your loan against property eligibilityand interest rates offered.A high credit score can help you secure a lower interest rate and better terms, while a lower score may lead to higher interest costs and stricter eligibility criteria.

6. Legal and Technical Due Diligence

Before approving a loan against property, lenders conduct legal and technical due diligence on the property. They need to ensure that the property is legally clear of disputes. Any legal issues can impact your eligibility and loan approval.

Apply for a Loan Against Property at IndusInd Bank

Here are some salient features and benefits of an IndusInd Bank loan against property:

• Simple eligibility criteria
• Hassle-free application process, with quick disbursal time
• A loan-to-value (LTV) ratio of up to 80%, based on the market value of your property.
• Flexible tenures for repayment, ranging up to 20 years
• The convenience of doorstep service
• Freedom to utilise the loan funds for business or personal needs
• An overdraft facility where you are given a credit limit to utilise during the loan tenure. Interest is applied only to the amount you use.

In conclusion, obtaining a loan against property is a viable solution for turning your real estate investment into a valuable financial resource. Apply online today through IndusInd Bank’s website by entering customer details (name, mobile & city) and enjoy speedy processing and quick disbursal.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.