Mistakes to Avoid While Taking Loan Against Property
Category: Loan Against Property
To meet dire financial needs many people opt for mortgaging their residential or commercial properties and borrow money from banks or NBFCs. This is called taking loan against property. While it is a common practice and availed by thousands of people, there are some common mistakes which make the customers pay more than what they should have. This blog will tell you about those mistakes so that you are informed and do not repeat them if you need to take a loan against property
No comparison of interest rates
One of the most common mistakes that people commit is that they fail to do loan against property interest rates comparison
. Every financial institution, be it a bank or a NBFC, will have its own set of interest rates, and if not compared well, you will end up paying a lot of extra money in the form of interest. Most people commit this mistake, as they are in a hurry to get the loan, but what they fail to understand is that in the process they end up paying a lot extra.
Not going through the prepayment terms properly
In their rush to close the deal, people do not read the prepayment terms thoroughly. Most financial institutions take advantage of that and charge a heavy penalty for prepayment. To avoid this, one should categorically check about the terms and conditions of prepayment before moving on with the processing of the loan. If you wish to repay the loan earlier, you may want to ask for floating rate of interest and not fixed interest rates.
Overlooking other liabilities
Even though loan against property interest rates comparison was done, people still end up in thick soup as they miss out on some other liabilities that were already ongoing. This could include any other existing loan, or pending bills of credit cards or similar things. To avoid this, one should be thoroughly aware of the liabilities and they approach the concerned institution to ask for loan against property.
Not Calculating the EMI
It is important that you do not miss out on paying the EMIs for the loan that you took against your property. Do calculate your monthly eligibility to pay back the bank and then decide on the amount of loan that you will take against the property. If you cannot afford to pay a healthy EMI every month, do not go for higher loan amount even if your property is eligible to get one.