Finance

Most Common Mistakes to Avoid While Availing a Loan against property

The future is uncertain and, you might require a large amount of money for anything and anywhere. So, it’s always better to keep some fund handy to avoid unforeseen circumstances. Loan against property is one such method that comes to your rescue in such situations.

It’s a common misconception among the house owners that they can keep their property as collateral and avail the benefits of Loan Against property policy in an attempt to avoid unforeseen circumstances. But in reality, this practice should be avoided as without the right information, you may commit a mistake.

You must avoid the following mistakes, if you have made up for mind to present your property in the form of collateral:

  • No Comparison:

One of the most common mistakes that people commit is that they take the interest rates very lightly. Without making any comparison, they select the first option that comes their way. Apart from just thinking about the money, you must also think that the interest rates vary from one lending institute to another. So, if you don’t want to pay extra, don’t forget to compare.

  • Neglecting Prepayment Terms:

While you are in a rush to get a loan against property, you might not pay attention to prepayment terms. Your neglecting can become an advantage for lenders, and they will end up charging more. So, to avoid such situation, you must go through all the terms and conditions thoroughly so that you wouldn’t have to regret later.

  • Longer Tenure:

You may find it comfortable to pay less amount till a long period, but the truth is the more you stretch the tenure, the more you will pay. Most of the people set the tenure for a longer period just because they get a chance to pay less EMI. But, in this way, you would end up paying more interest rate. Therefore, keep the tenure as short as possible.

  • Disregarding Other Liabilities:

Even after comparing the interest rates and preparing yourself for the best and worst, you may still end up getting trapped in problems. Such problems arise when you disregard other liabilities. The list of which can include other existing debts, credit card statements, pending bills, etc. These things can add more to your burden. Therefore, before taking a loan, try to get rid of them as soon as possible.

  • No EMI calculation:

While taking up a loan, it is important to calculate the EMI beforehand. There is no way you can afford to skip EMI for even a single month. It will end up adding an extra amount to your next EMI. So, before affirming the amount of EMI, check how is it going to affect your monthly budget. Set the EMI to the extent that you can pay.

Taking up loan against property may not be much difficult, thanks to various lending institutes available today. But, before taking the final step, don’t forget to follow the tips mentioned above.  Avoid these mistakes and get a loan without any hindrance.