Here is The Best Way to Choose Loan Against Property Interest Rate
An instant approval loan helps you tide over the most challenging financial crisis seamlessly. Plenty of Indian lenders offer instant approval loans to make life easier for Indian citizens. You can also get a host of value-added benefits with the loan.
However, choosing the right instant approval loan product can make the difference between satisfaction and despair.
People requiring urgent money often rely on personal loans to cater to a financial emergency.
However, intelligent investors always choose loan against land property when they are eligible. A loan against property not only provides them with funds at ultra-low interest rates but also a long time to repay.
Why is Loan Against Land Property The Most Cost-Effective Loan Option?
A loan against land property offers borrowers the following distinct advantages over other loans, such as a personal loan:
1. Any Indian citizen with property ownership can apply for a loan against land property.
2. You may mortgage any freehold residential or commercial self-occupied, rented, or vacant property.
3. The interest rates generally start from 9.50%. It is hard to find any other flexible and instant approval loan that offers so many features at such a low cost.
4. You may use the loan amount without any end-use restrictions. Borrowers spend it on weddings, travel, higher education, hospital expenses, business purchases, house construction, home renovation, or anything they wish.
5. To avail of a loan against land property, you have to submit no more than ten documents. Some lenders offer an online document uploading facility, while others, such as PNB Housing Finance, offer doorstep service. The doorstep service method of loan approval is usually faster than other methods.
What Are The Various Types of Interest Rates?
Loan against land property interest rates is of two types – fixed and floating.
Reputed lenders like PNB Housing Finance offer both types of interest rates. Choosing the right interest type is paramount since it affects your repayment plan and the EMI amount.
Fixed-Rate of Interest
Loan against land property fixed interest rate remains the same irrespective of market fluctuations. For example, if you avail of a loan against land property at a 10% interest rate for 20 years, the interest rate and EMI will remain the same for the entire term. Fixed rates are typically 1% to 2% higher than floating rates.
The fixed loan against property interest rate will suit you more if you are sure that the rates will increase in future.
However, if your analysis and prediction go wrong, you can regret the decision to go for a fixed rate.
Floating Rate of Interest
The floating rate of interest depends on market-based lending rates or MCLR. If the MCLR increases, the loan against property interest rate increases and vice versa. A significant benefit of the floating rate is that, unlike the fixed-rate, you can prepay or foreclose the loan against land property without paying a foreclosure penalty.
The floating rate is best suited when the interest rates are high, and the conditions are perfect for an interest rate reduction. Moreover, since the floating rate is usually 1% to 2% lower than the fixed-rate, you can save a considerable amount by choosing this.
Now that you know the interest type and its impact on your budget let us know about the factors that affect the loan against a property interest rate.
Top Factors That Affect Loan Against Property Interest Rate
- The Lender – Choose your lender carefully since the interest rates depend on the lender’s reputation. Inexperienced lenders lure customers with low-interest rates and levy higher fees on services like foreclosure or processing.
- Age – The borrower’s age also impacts the rates. For example, a borrower whose age is near the maximum age for loan application might have to shell out more against someone near the minimum age.
- Monthly Income – If your monthly income is far above the minimum income criteria set by the lender, they may perceive your loan as less risky and offer you a lower rate.
- Income Stability – The more stable your profession (job or business) is, the better rates you may expect from a lender.
- Loan Tenure – The loan tenure has a major impact on the loan against land property interest rate. For example, if you choose a short term, the lender may perceive your loan as risky and increase the rate. In contrast, if you select an extended loan term, the rates might be lesser.
The interest rate of a loan against land property depends on many factors, including the borrower’s credit score, income, stability, loan to value ratio, etc. Evaluate the loan rates before signing the loan application form.