As a form of mortgage financing, a property loan is one of the most common types of funding options that people choose when availing secured funding. One of the prime reasons that support such popularity is that the advance comes loaded with utility for all financing needs of individuals, spanning their personal and professional expenditures. The high-value financing arrangement of a loan against property also means that one can avail the funding to meet expenditures of high quantum as well. Not to mention, there is a wide array of properties to choose from for mortgaging to avail a property loan. It thus means that the property that you own would likely check out the eligibility criteria of property types for the purpose of this mortgage financing.
When availing a property loan, you are required to go through a set application procedure as required by your selected lender. However, before that too, it is crucial to check a few aspects of your borrowing to be well-assured of loan availability, which not many people know of. Here, we will delve into a few important steps to complete when availing the advance.
1. Decide on the property type to mortgage carefully
As already mentioned, lending institutions today accept various properties as mortgage to finance a loan against property against. While several properties fall under this ambit, they are particularly classified under two categories based on their uses, namely residential and commercial property types. Thus, whether you own a commercial property or a residential one, or both, you can utilise either to raise funding.
The loan against property eligibility requirements, however, lay down some ground rules for these properties to qualify as mortgages. One of the the most commonest requirements is that the property must have a remaining life of over 20 years. Another requirements asserts that such property must be free of all encumbrances, with all fees and taxes duly paid until the present year.
Further, you can take care to choose a property for mortgage that holds the highest current market value, and is situated at a prime location with all modern amenities in place. Mortgaging such a property can fetch you a higher financing value than other properties can.
2. Check your maximum loan eligibility
Before applying for the loan, you must also make sure to check how much financing you are eligible for at the maximum limit. It is crucial to check this limit as applying within it improves your chances of fast approval. Contrarily, if you apply for a financing value over this threshold, your chances of loan rejection increase. You can use a property loan eligibility calculator to assess your maximum loan eligibility. The financial tool uses your income, age, and other such details to calculate your maximum eligibility for the advance.
3. Assess EMI affordability for your selected loan amount and tenure
At last, you must also make sure to check whether the loan amount and tenure selected by you keeps the EMIs payable affordable or not. To determine affordability, check if the EMIs accommodate easily in your monthly income without straining your disposable income much or not. Use a property loan EMI calculator to compute EMIs. Change the loan amount and tenure values to arrive at a suitable EMI that fits well within your affordability. Along with these, you must also make sure to find a lender offering the lowest rate of interest on a loan against property. This shall bring down the total cost of your loan significantly. Also, consider the cost involved in other available facilities as well, such as loan balance transfer and prepayment to assess the overall affordability of your loan
