Hyderabad: Savings are the foundation for financial freedom. However, this may not be enough for you to achieve your dreams. Start a business on your own. Need money for an emergency. Whatever the occasion, taking a loan becomes unavoidable sometimes. Many types of loans are easily available in the market. The foremost among them are 'loans against property' (LAPs).
Compared to security-free loans, the LAPs have some advantages. We must carefully examine these things before taking one. Those taking a loan for the first time and looking for self-employment can take a 'loan against property'. Higher loan amount will be available along with lower interest rate and 15 to 25 year long terms.
Own house and commercial site can be mortgaged to take loans for carrying out your business. At the same time, the loan recipient can continue to enjoy rights on his property. The quantum of loan depends on your rights of ownership on the property. Houses usually have a higher loan to property value.
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Before taking a LAP, check whether you have all types of property documents required. Both banking and non-banking financial institutions are providing these loans. They look at the loan applicant's credit score, repayment capacity, property value, age, profession, location of property, its age, etc. You can get loan up to 80 percent value of property. Sometimes, the bankers may reduced it to 70 percent under peculiar circumstances.
Taking a loan means entering a financial agreement for a fixed period. Utmost care should be taken in this regard. Before applying, carefully select the right financial institution suitable for you. Established and trusted firms are preferable. Those giving loans based on the property value should be examined. Some other firms are giving loans based on income.
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Long-term loans yield more benefits when compared with short-term loans. Suppose a person having Rs 70,000 monthly income took Rs. 25 lakh loan at 12.5 percent rate of interest for a term of five years. Instalment comes to Rs 56,245. If the term is 15 years, instalment comes down to Rs 30,813. It is always better to pay off loans as early as possible.
Regarding long-term loans, find out whether the bank will permit partial repayments. You must have some advantages in this. The LAP loans are easily available in the market since security is there. Such loans should be put to proper use to achieve your financial goals.
