When it comes to taking a mortgage loan, we all want to make the most out of it because we are actually putting the value of our property at work. Remember that your property is an asset. While you can use it as your home or to earn rent, it can help you borrow large sums of money for different needs. At a certain point in life, you would wish to have access to a large pool of money so that you and your family’s necessities can be fulfilled. You may need larger amounts of money for things like starting or expanding business, sending children abroad for higher education, funding for your child’s marriage, or buying another house or constructing another house. All this requires a lump sum of money, and a regular personal loan may not fulfill your dreams.
This is where a mortgage loan may help you. If you own a property – residential or commercial, or even simply a land – you can make the best use of it by putting it as collateral and fulfill your dreams with funds you get from it.
In this post, we will tell you how you can make the most out of your mortgage loan and enjoy seamless benefits.
Take a long-tenured LPA and prepay whenever you can
A loan against property is availed for significant loan amounts. It can go as high as ₹5 crores and more with a maximum tenure of up to 15 years. Experts suggest that whether you are taking a loan against property for business funding or for personal needs, to make the most out of it, you can take a longer repayment tenure. By doing this, you will be lowering your monthly EMI payment while getting more time to accumulate a corpus amount. You can then use this corpus to either foreclosure the loan in the future or make partial prepayments. Either way, you will be closing your loan soon before the tenure ends. This is a great strategy that you take to reduce the pressure to repay the loan altogether.
LAP is a secured loan that involves the availability of high loan amounts and lower loan against a property interest rate. But it has been seen that the majority of the borrowers end up over-leveraging the loan. Over-leveraging means borrowing too much – more than what one can actually afford. Thus, it increases the risk of loan default and, ultimately, the risk of losing the concerned property. The lending institution has all the rights to recover the unpaid loan amount by putting your property on auction. So, it is important to stay disciplined and do not avail a loan that you cannot afford, even if it is easily available.
Always compare the lenders before purchasing the loan
The most crucial aspect of taking LPA is to compare the lending institutions on numerous parameters. This will allow you to evaluate the loan amount they are offering for the same property, as well as the interest rate. There may be some differences in how each lender operates. Some lenders may charge higher processing fees, while others may not.
Ensure to compare all your options and read the contract thoroughly before signing it.