All You Need To Know About Up-Downs In Loan Against Property Interest Rates During The Festive Season

People apply for loans for various purposes. These may include medical emergencies, weddings, vacations, expanding business, education, and many more. There are various types of loans available in the market. One of them is a loan against property(LAP).

A loan against property is a secured loan that requires a property to be used as collateral in exchange for funds. This secured loan product can be used by salaried individuals and businesses. All it requires is mortgaging your residential or commercial land. 

There are several benefits of choosing a property against loan to raise funds. The long repayment period is one of its benefits. The repayment period can be 5 to 15 years. When compared with other loans it has lower interest rates and charges.

Since it has a longer repayment duration and lowers interest rates then the EMI would also be low. It is also easy for you to get a property against loan as the banks receive collateral in return. It is an affordable option to raise funds in a time of need. 

Factors To Consider Before Applying For A Loan Against Property

Before applying for a Loan Against Property (LAP) you should consider the following factors:

• Interest RatesInterest Rates have a huge impact on your EMI. If your interest rate is low then your EMI amount would be subsequently low. 
• Zero Tax BenefitsWhen you get a housing loan or education loan, you receive certain tax benefits. However, that is not the case with Loan Against Property. LAP has no tax benefits. 
• Property ValueYour loan principal amount greatly depends on your property’s value. Thus, before applying for LAP, be sure about your property’s value. 

Loan Against Property Interest Rates During The Festive Season

You purchase new jewellery, car, household items, and clothes every festive season. You also see a lot of discounts and offers during this period. Banks further reduce interest rates to attract customers to avail of a loan. These offers help the real estate industry and the banking sector by increasing sales.

The festive season is the best period to apply for a loan as the cost of borrowing becomes less. The real estate market has shown an upward trend during the festive season. This may cause the banks to slash their interest rates to attract customers. 

Factors That Affect Loan Against Property Interest Rates During The Festive Season

Various factors determine your property loan interest rate, processing fees, and other parameters. You should compare different loan plans before deciding on one. While home loans may provide you with an interest rate of 6.7-14%, LAP interest rates are different.

Let’s look at the range of factors that impact the loan against property interest rates:

• Age: Firstly, the age of the applicant is a factor. As banks prefer applicants between 25 and 65 years of age. 
• Relationship with Lender: Secondly, if the applicant has a long-standing relationship with the bank then they might be offered a lower interest rate. 
• Property Type: Thirdly, the interest also depends on your property type. If it is a commercial property that has clear ownership then a lower interest rate can be expected. 
• Income: Your income level is also another factor that is taken into consideration. If you have a higher income level then you may easily get qualified for a loan. 
• Principal Value: If your principal amount is high then your monthly payment is also going to be high. 
• Tenure: Another factor that affects your interest rate is the duration of your loan. If you have chosen a longer duration, your EMI would be low and vice versa. 
• Type of Interest Rate: If your interest rate is floating then your EMI would be cheaper compared to a Fixed Rate of Interest. A floating rate of interest depends on the interest rate set by the Reserve Bank of India. It keeps on changing according to the market. The Fixed rate of interest is decided by the bank itself. 
• Employment: Your occupation has a great effect on your interest rate. If you change jobs frequently then it may be tough to get a loan and even tougher to get a lower interest rate. 

Types Of Loan Against Property Offers During The Festive Season 

• Various banks decrease their interest rates during the festive period. These decreased interest rates lead to less cost of borrowing. 
• Banks usually reduce processing fees during the festive season to attract customers. This also leads to lowering the overall cost of loans against property. 
• Some banks even offer to waive the pre-payment charges during the festive season. Pre-payment charges are the fees that you have to pay when you decide to close off the loan before the tenure ends. 
• Banks also introduce ways to make the loan process easy for you. You can apply for the loan online and complete it in just a few minutes. 

You should be aware of any festive offers that your bank introduces during the festive season. It may help in reducing your monthly payment and overall borrowing cost. Contact your lender during the festive season to be updated about such deals. 

The Bottom Line

The festive season is a great time to make use of the best offers and deals. It is a great time to get your interest rates and cost of borrowing reduced. These festive offers are applicable for new loans and balance transfers mostly.

If you wish to learn more about property against loan, you should visit Piramal Finance. By applying for a loan against property you can receive funds at a low-interest rate and a longer repayment schedule.