ALL YOU WANT TO CONSIDER BEFORE APPLYING FOR MORTGAGE LOANS AGAINST PROPERTY

 If you own an asset with a high market value and you have immediate fund requirements, a loan against property might be the right option for you.

It is an easy and cost-effective way to meet your funding requirements on the rise by mortgaging your assets as collateral security.

Loan against property (LAP) rightly put, is a secured loan option that you can opt for by mortgaging your fixed assets. You can mortgage fixed assets such as residential or commercial property or a portion of land, or just anything that has a high market value. 

The most striking benefit behind mortgaging your property is that you can reside or still make use of it even after availing of the loan.

A mortgage loan against property is not purpose-specific, but you can make use of the funds attained to cover any of your financial requirements. Not only so, but LAP is a much cost-effective option to meet your financial needs compared to personal loans.

You can avail of the loan either by the EMI mode or overdraft facility that suits your needs better.

Although LAP comes with its share of benefits, there are specific things to consider before availing of it as a funding option.

Is it the right choice to go with a mortgage loan against property?

Always consider other funding options before mortgaging your property as collateral security. In case if you require a small number of funds to meet your financial requirements, there are other loan options too.

 Only avail of the loan against property option if you have a high-value asset in possession or your funding requirements are too high. Most financial institutions will lend you about 40% to 70% of your property's market value so makes decisions rationally.

If you are mortgaging your property for a purpose-specific requirements such as your educational funding or home renovation purpose, a purpose-specific loan might suit your needs best.

Although loan against property is a cost-effective option, making use of your property for a specific purpose or every funding requirement does not make sense.

Assessing the tax benefits

A mortgage loan against property does not come with any tax benefits for its customers. Unlike other loan options, you cannot avail of any tax deductions on your LAP loan amount. Study and educate yourself well before applying for such loans.

Sanction of LAP requires time- Be aware of all the delays and avoid the requirement of emergency funds

If there is an urgent requirement of the funds, a mortgage loan against property is not the right option to pick. LAP consumes a lot of time before handing over the required funds.

The authorities will verify your property, evaluate your loan repayment capacity, and only then pay you the loan amount.

If you have an immediate requirement going for a personal loan or other purpose-specific loan option is the right way to go.

You can check if you are eligible for mortgaging your fixed assets to meet your requirements on fintech. Fintech is an evolving platform that merges finance with technology to help you decide and makes a better financial decision for your funding requirements.

Assessing the charges- here are some hidden charges that you might not be aware of

Most banking institution generally charges a processing fee of 1% to 2% of your loan amount when you mortgage your property for meeting the funding requirements.

If you have a history of bad credit score or untimely payments, consider the penalty charges before mortgaging your fixed assets.

Most lending platforms also charge a certain amount for the prepayment of loans to keep the loan amount going.

All such fees will add up to your entire loan repayment amount, so make a wise decision before applying.

Fintech platforms can gather information about several lending companies and find the most compatible one. It saves from the unnecessary hassle of visiting various banking institutions and helps you do your job conveniently.

Ascertaining the duration for your loan

Another essential benefit of availing of the loan against property options is its long term tenure.

If you struggle with huge EMI payments, then this is great for you as you can extend your tenure as high as 15 years, sometimes even thirty years, depending on your lending platform. A long-term tenure helps you with shorter and relaxed EMI payments and does not break your bank whereas, a short-term loan such as personal loans or home loans does not offer such a facility.

However, the more you increase your loan tenure, the higher is the interest amount.