Unlock the potential of your property and gain access to long-term funding. Check out the top ways to avail the best interest rates while taking a loan against Property.
Whether you’re expanding your business or meeting emergency requirements, there are several situations, when financial needs arise out of the blue. Meet your financial requirements quickly with a Loan against Property.
What is LAP?
As the name suggests, you mortgage your property (house or other commercial properties) and avail funds. This is a secured loan as you submit your home as collateral. It’s cheap, quick and easy. Financial institutions provide you with a loan amount of upto 65% of the market value of the property.
Just like any other loan, you have to pay interest on the amount you have received during the loan’s tenure.
Now, the big question in your mind is, “How can I ensure that I avail the best Loan against Property interest rates?” The interest rates for LAP aren’t fixed, and with a few tricks up your sleeve, you can ensure that you land the best deal.
Here, in this article, you can find the top 5 ways that will help you in securing the best interest rates in the market.
- Boost your Credit Score
The credit score is often the first thing that your lender will evaluate when considering your loan application. The CIBIL score is a rating that determines your loan repayment capacity and your credibility.
A low credit score not only reduces the chances of your loan getting approved but also costs you high-interest rates if your loan gets sanctioned. So, ensure that you have a good credit before applying for a Loan against Property.
- Don’t Approach the Big Lenders
Traditionally, the first choice that pops into one’s mind for loans is to approach the big retail banks. However, these banks do not offer the best interest rates for LAP. Instead, contact other financial institutions to lend the best interest rates. These lenders offer competitive pricing in an attempt to woo new customers. So, always check around and look beyond the big bankers if you want to avail the best interest rates.
- Flaunt your Employment Status and Income Stability
If you have a steady income and enjoy good status with your employer, then the chances are that you can get the best interest rates from the lender. Extended periods of unemployment and frequent job changes aren’t likely to favour you when applying for a loan.
So, if you’re considering applying for a LAP, then it pays to hold on to your current job since people who have been employed in the same job for the last two years or more are likely to get the best interest rates.
- Lower your Debt-to-Income Ratio
The Debt-to-income ratio is a crucial factor in determining your interest rates. If you have already availed plenty of other loans like personal loans, home loans and are currently paying EMIs for all of them, then your DTI is sure to be high.
Higher the DTI, higher is the interest charged to you. So, try to pay off a few loans before availing a LAP to secure lower interest rates.
- Look Around
Most people overlook this step. Do your homework, search around, and compare interest rates to find the best lender who offers you the most competitive rates in the market.
Loan against Property can be a lifesaver in times of financial needs. But, that doesn’t mean you have to choose the first lender you come across. Instead, scout around, sharpen your negotiation skills and find the best financial institution which offers you the best interest rates.