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6 Important Rules to Follow While Taking a Loan Against Property

Loan against property (LAP) is a secured loan to meet your current financial problems. In simple terms, it is the solution to all your financial problems. It is a type of loan in which you can avail by keeping your commercial/residential property as a collateral to the lender.

The COVID19 pandemic has indeed been troublesome for business owners. Amid the economic uncertainty triggering fears of job and income loss, it would be a wise decision to take a loan against property to combat the shortage of working capital. This will help you survive a difficult time without selling all your assets.

But before applying for a loan against property, you need to know the value of your property, so that you can crack a better deal with the financial institution.

At Shubham Housing Finance, we believe that no matter where you are and what you do, you can always achieve your aspirations. We generally look at your age, your income, your to assess the EMI amount you need to pay every month.

However, we would like to provide you with an overview of the documents required for availing a mortgage loan.

The documents such as age proof, income proof, address proof, as well as documents related to the title of the property will be required. So make sure you have all these documents for faster processing of loans.

Here are some rules that you need to consider before you mortgage your prized assets.

1. Borrow based on your financial situation:
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Take a loan that you can comfortably repay. You should always borrow an amount that keeps your loan to income ratio within acceptable limits. However, the EMI should not exceed more than 50% of your monthly income. If your EMIs gobble up too much of your income, then other critical financial goals like saving for retirement or your kids’ education might get impacted. Make sure you don’t commit this mistake. Therefore, before you take a loan, calculate in detail using an EMI Calculator to check out the monthly EMI that you would have to pay in the future.
2. Keep tenure as short as possible:
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There is an inverse relationship between tenure and EMI. Longer the tenure, lower will be the EMI and vice versa. However, it is always advisable that a person should take a loan for the shortest tenure as the interest burden will be lower in the case of the short loan tenure. Shubham Housing Finance provides you with a repayment period of up to 10 years.

3. Ensure timely and regular repayments:
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It is the most important rule of taking any loans. Being disciplined will not only keep your payments organized but will also save you from massive amounts that would otherwise go out as penalty or extra interests. Moreover, late payments are shown in your credit score, which reduces your probability of availing a loan in the future. To avoid such unpleasant situations, you must pay the EMI on time.
4. Avail insurance with big-ticket loans:
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When you avail a mortgage loan, you assume debt for the long-term. It is recommended that you buy a term plan to ensure that your family member does not suffer from any financial difficulty, Shubham Housing Finance helps them if any events occur.
5. Don’t borrow to splurge or invest:
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It is also one of the classic rules! Never use borrowed money to invest. Taking up debt for entertainment expenses has the highest potential to pull you into a debt trap. High yielding investments, such as equities, are volatile. If the markets decline or things go wrong, not only you will suffer losses but also you will be strapped with an EMI.
6. Read the fine print:
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It is essential to read the terms and conditions carefully to avoid nasty surprises in the future. There may be additional charges, which might increase the cost of your borrowing. So it is better to be informed than to regret later. However, at Shubham, we make sure the customer comes first, also we inform them about all the terms and conditions beforehand so that they would not be surprised in the future.

Everyone faces different challenges in life. At Shubham, we understand your financial needs and therefore we provide loans with smooth and transparent processing. 

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