The loan against the property market in India is expected to grow at a CAGR of over 14% and reach $857.87 billion by FY 2026.
There is no restriction to the end use of the loan amount one gets against his property, and the borrower has the freedom to use it for a variety of purposes like business expansion, education, destination wedding, and more.
The property acts as collateral for these loans and the borrower can continue to use their property like before while using its value to generate funds in the form of a loan against the property.
Lenders offer a large sum to borrowers at a relatively low loan against property interest rate. It makes a loan against property a preferred option to arrange funds.
There are several factors one needs to consider before deciding on a property loan. The interest rate at which the lender is offering the loan and the repayment tenure are two crucial factors that one must consider while taking a property loan.
Let us understand these and other deciding factors for a property loan.
- Interest rate: The interest rate at which a loan is available decides the cost of the loan for the borrower. Hence, it is necessary to choose a loan that offers a low-interest rate. Lenders check the creditworthiness of the borrower before deciding the interest rate. A borrower with a strong credit history can get a property loan at a lower interest rate and easier repayment terms than a lender with a bad credit history.
Lenders may offer property loans at lower interest rates if the property pledged by the borrower is a self-occupied residential property. The interest rate on loans against commercial properties or properties that are not self-occupied is relatively higher.
Fullerton India offers high loan to value on both residential and commercial properties. With a trusted lender like Fullerton India, borrowers can get a property loan at low-interest rates starting at only 9%, which significantly brings down the cost of the loan.
- Repayment tenure: The repayment tenure is the duration within which the borrower has to pay back the principal loan amount and the interest. Property loans have a longer repayment tenure compared to other loans such as gold loans and personal loans. A longer duration reduces the monthly repayment burden on the borrower.
If the borrower has a strict monthly budget and cannot afford to pay large monthly EMIs, he can opt for a longer loan duration. However, a longer loan duration means higher interest costs. Therefore, a borrower can use the flexibility of a longer loan tenure to reduce his monthly payments but should try to repay the loan at the earliest possible and not stretch repayment unnecessarily.
Fullerton India offers property loans for a duration of 15 years and the borrowers can customise the loan tenure as per their monthly paying capacity.
Other Factors that Affect the Property Loan Decision
- Loan amount: Lenders offer a percentage of the property’s value as the loan amount. They take various factors into consideration while deciding the loan amount, like the borrower’s repayment capacity, his source of income, past payment records, etc. Fullerton India offers property loans of up to Rs. 5 crores to borrowers, giving up to 70% of the property’s value as loans.
- Loan processing: Getting a loan can be a hassle if the lender is not cooperative. You may have to stand in long queues, furnish a long list of documents, and pay high processing fees if you select the wrong borrower.
Trusted names like Fullerton India ensure maximum speed and transparency in loan processing. Their team is reachable over the phone and email to help loan applicants find the most befitting loan option.
One of the first things a borrower considers while availing of a loan against property is the applicable interest rate on the loan. Additionally, the loan repayment tenure should be flexible enough to accommodate the monthly paying capacity of the borrower, without adding too much to the overall cost of the loan. Fullerton India offers personalised loans against property to meet the needs of different borrowers. Loan applicants can apply only for easy loan processing and quick loan disbursals with Fullerton India.