Will Loan against Property Help You to Get Smaller EMIs as Compared to Other Loans?

EMI

So you’ve finally decided to go to the loan route to meet your expenses. Now the research part comes in. Of course, you’d want the loan with the lowest EMI and interest rate. Some others may want to have a longer tenure or a larger value loan.

There were indeed little options once upon a time. Nowadays though, you have various loan and mortgage options to choose from. A mortgage loan’s interest rate depends upon various factors like credit score and bank’s risk. Providing personal loans to self-employed individuals is a risky proposition and hence costs higher interest and EMIs.

Subsequently, the repayment time of personal loans is small and the EMI high. That’s because the bank is taking a higher risk of providing you money in advance. They don’t have your assets to sell if you fail to repay the loan on time. 

That is not the case when you apply for a mortgage loan, you mortgage your property and the bank can confiscate it in case you fail to repay the loan. That comes with a length of terms and conditions but the loan is quite lucrative. You can loan nearly 70% of your property’s cost at maximum and can take up to 20 years to repay it when you apply for a mortgage loan. Likewise, you’d pay smaller EMIs that are convenient to repay.

Reasons, why Loan Against Property helps, get lower EMIs

Lower Risk

If you have a residential or commercial property for a mortgage, it’s best to use that to get your loan. Indeed, the bank or finance companies aren’t at any risk and hence can offer you larger values of loan for longer periods. Personal Loans, on the other hand, won’t get you high-value loans either. You’d have to repay them quickly and hence would need to pay higher EMI.

High Tenure Loan

You can take a loan against property and pay them back in as long as 20 years. Naturally, the EMI would be lower when the amount is spread over a large time. Personal loans, on the other hand, have to be paid back quickly and at a higher mortgage loan interest rate because the bank has only you as a guarantor. 

The value of the property is greater than the income

You might be a salaried employee with good earnings but the salary is never a complete guarantee since jobs can be temporary. There’s no permanent guarantee that your job will remain until you pay the loan. On the other hand, the value of property keeps on increasing, and hence the bank’s money is safe.

They can get their money back by selling off the property in case you fail to repay the loan for a long time. Hence, they provide a lower interest rate and longer tenure of EMI for loans against property.

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