The loan against property is a process in which the borrower should opt for when an individual is in need of the money thus can borrow money by lending the property to the financial needs of an individual. The borrower is expected to read all loan-related documents carefully before the approval of the loans and signing of the documents. The borrower can also negotiate the terms related to the loan- related conditions if the borrower finds the terms & conditions misleading or totally in favor of the lender ,only then the acceptance of terms & conditions can be denied by the borrower. The borrower should also compare rates for loans being available so as to get maximum benefits and save money on interest re-payment.
The borrower ,for additional information, can also go through the Reserve bank of India guidelines and compare if the key essential factors are mentioned in the term agreement or not. The borrower can also file for the income tax returns so as to get benefit on the interest credit, if the borrower will utilize the funds for buying a new property. The borrower should keep ready all the necessary documents so as to keep the get the easy approval process of the loan to be sanctioned by the bank. Also, the borrower should ensure easy availability of funds so as to ensure smooth repayment of funds and avoid the penalty being charged. The borrower should also ensure a consistent income guarantee so as to avoid delay of repayment of funds and avoid penalty/ sealing of the property. The borrower should also ensure the exact market rate of the property being required to be mortgaged so as to know the exact value up to what extent the borrower can avail of the credit facility.
Factors to be considered before the approval of the loans:
· Clauses related to the loan’s terms & conditions:
The terms and conditions of the loans should not be in such a way that the borrower may get mislead or should not be overcharged for the interest repayment at higher charges. In terms & conditions, it should be clearly mentioned related to the penalty levied upon the borrower for the delay an installment of the monthly loan installment. Also the borrower should verify if there are any hidden clauses wherein the extra charges be levied on the borrower, thus leading the customer to get de-frauded. Also, the borrower can request to modify some clauses into the agreement ,which are found to be totally misleading or totally against the favor of the borrower, failing which the borrower should deny the loans of the applicant. While in such a case, the borrower can even opt for the competitor companies loans, wherein the terms can be better and in the favor of the customer. The borrower should also decide the loan amount to which is required to be needed so as to satisfy the need and purpose of the individual.
· Identify the worth of the property:
The borrower should estimate the exact current market valuation of the property so as to decide accordingly the exact estimate of the loan eligibility amount which can be borrowed. The borrower can apply for the loan on 60-70% of the valuation of the property value. The borrower can even opt for the lower amount for a loan against the property as per the requirement of an
individual. The property evaluator can be the best kind of consultant who can estimate the property valuation.
· Check with the past track records of the borrower:
Before applying for the loan, the borrower should check for the past experiences of the other loan applicants who opted for the loans previously and then must have shared their experiences about the overall likelihood or dislike experience about the bank. The borrowers can also check on the internet about the performance and stability of the lending financial institution. Also, it should be verified if any malpractices or harassment been carried out by the financing company in that case the borrower should avoid taking loans from such financial institution and opt for another competitor.
· Check for the comparative interest rates of the borrower:
The borrower can check for the competitive rates of the loans being offered to the customers by the lender so as to avail the best possible interest rates available into the market. The borrowers can save quite a big sum by opting for the lowest competitive rates offered by the lender. As the interest is being charged on a cumulative basis ,the borrower even, on a point basis of lower interest rates, can save quite a good money to the borrower.
· Check for the liability of the interest burden as well as re-payment capacity of the individual:
The borrower should decide the repayment possibility by taking into consideration the monthly installment being charged to the borrower. As against the mortgage of the property, the borrower should be able to repay the loan on a monthly installment so as avoid being penalized.
It can be assumed that the borrower should take all these points into consideration so as to avoid getting cheated by misleading terms & conditions as well as be able to avail loans at the lowest possible interest rates in order to save money for an individual. Also, the repayment capacity of the borrower should be analyzed by the applicant itself according to the monthly salary so as to avoid getting penalized for non-repayment of the loans.