The rapidly growing financial services sector in India has made finance easily accessible to borrowers through a wide range of financial products. Customers are opting for different kinds of loans (along with Loan Against Property) that have different repayment tenures and EMI schedules. Remembering the repayment schedule for all these debts can be a difficult and complex task for a borrower.
To deal with this complexity, customers are taking advantage of the maturing financial market and are looking for ways to rationalize and plan their debt sources. It helps borrowers optimize the cost of their portfolio borrowings and manage the existing loan obligations more responsibly.
Debts can be either secured or unsecured. Lenders offer unsecured debts at relatively higher interest rates and strict eligibility criteria. Secured loans like property loans are available at lower interest rates and easy eligibility criteria. Therefore, customers can use loans against property to consolidate their various debts into one for hassle-free repayments.
What is Debt Consolidation?
Debt consolidation is the simple process of clubbing multiple loans into one, to do away with the stress of managing multiple debts with different repayment schedules.
Debt consolidation reduces the interest burden on the borrower and ensures higher financial stability.
A customer can take a consolidated loan against property debt at a low property loan interest rate, which covers his outstanding portfolio debt. It can help him close his expensive unsecured loans like credit card loans.
When a customer has large current financial obligations, he can get loans against property with a high loan to value from a reputed lender like Fullerton India, which offers 70% of the pledged property’s value as a loan.
The borrower can use this loan amount to pay off his existing liabilities and focus on paying a single EMI at low-interest rates.
What is a Loan Against Property?
A loan against property, also called a property loan, is a secured loan that is available against a residential or commercial property.
LAP is available at lower interest rates because it is a secured loan and the eligibility criteria to get this loan is also relatively easier. Lenders offers property loans starting at only 9% per annum interest rates at easy repayment terms.
Benefits of Loans Against Property
Customers can consolidate their debts by taking a property loan for the following benefits:
- Lower interest rates: Property loans are available at a much lower interest rate than unsecured loans. The interest rate decides the cost of a loan, therefore, a lower interest rate means less expensive loans for the borrowers. It is a sensible move to take a property loan at a low-interest rate to pay off high-interest rate loans to save on the loan’s cost.
- Low monthly payments: Multiple debts come with different EMI schedules. It is easy for the borrower to forget one or more repayment dates. Missed EMIs lead to heavy penalties from the lender and are an unwanted expense. A borrower can take a single property loan and pay its EMIs on time to save himself from such penalties. The timely and disciplined loan repayment will also give a higher credit score to the borrower and help lay the foundation of a strong credit history for him.
- Higher loan amount: Borrowers can get a higher loan amount by pledging their property as collateral. The present value of the property decides the loan amount it can get. Borrowers can get up to Rs. 5 crores as a loan against their residential and commercial properties.
- Repayment tenure: Property loans have a much longer repayment tenure than other loans like gold loans and credit card loans. Borrowers can take a property loan for a maximum period of 15 years, which gives them the comfort to pay smaller EMIs and also gives them enough time to repay the loan. It reduces the chances of default on the loan.
When an individual has sizable debt obligations, a property loan is the best way to consolidate multiple debts into one low-interest loan. Trusted names offer customized property loans to suit the needs of different borrowers. Additionally, the loan application and processing are transparent and quick saving the customers from unnecessary stress and time wastage.