Property loans fall under secured loans. The bank will take property paper and provide a loan against property value. Most lenders offer up to an 80% loan of property valuation. When borrowers require higher loan amounts that cannot fulfilled from unsecured loans, they go with secured loans.
The borrower provides commercial or residential property as collateral. As a Loan Against Property (LAP) comes with a longer tenure, you have to pay EMI for a long time. If you can reduce the interest rate, EMI (Equated Monthly Installment) will be lower.
24hr Loan searched 4 proven tips to minimize property loan interest rates. You should apply these tips to lower interest from 11% to 9.65% p.a.
The 4 Proven Tips to Minimize Property Loan Interest Rates
1. Income Proof
Income proof is one of the hidden keys to decreasing interest rates. If an employed or Salaried person has a higher income, the lender will minimize the rate of interest. The salaried person with a Rs. 15,000 salary and the salaried person with a Rs. 30,000 salary interest rate will defiantly different.
In the same way, one self-employed customer who holds only a trade license will get a higher ROI (Rate of Interest) and another customer who holds a GST file, ITR file, and trade license will obtain a property loan at a lower ROI.
So, income proof is the game changer of the match. I think you understand how to play the match.
2. Healthy Credit Score
We all hear that health is wealth. But you should also know that credit score is wealth. Yes, credit score can save your wealth. Banks will provide cheap interest rates if borrowers maintain a good credit score of 750. As I already said property loan comes with long repayment terms, and you can save a huge amount if you maintain a healthy CIBIL score.
Your healthy credit score shows trustworthiness which indicates you are responsible for paying the EMI on time. This trustworthiness helps you to decrease interest rates. However, a person with a lower credit score cannot get cheap interest.
Hence, it’s important to pay the EMI on time and maintain a good credit report that will help in the future.
Also Read: Make Dream Home at Home Loan
3. Balance Transfer
BT (Balance Transfer) is one of the popular terms for loans against property. The existing property loan holder may transfer the current loan to another bank which is called BT. If the borrower is not happy with an interest rate, you can use BT features for a lower interest rate.
Let’s assume Suresh’s current loan running to Bandhan Bank. However, Suresh is not happy with the interest rate. So, Suresh talks with the State Bank of India for Balance Transfer. Now, SBI will take all documents from Suresh and directly go to Bandhan Bank for Balance Transfer. At this time Bandhan Bank asks for a due loan amount that will SBI pay on behalf of Suresh and the property loan will transfer to the State Bank of India.
This way, the Interest rate will be lower and sometimes you may obtain the maximum loan amount.
4. LTV Ratio
The full form of LTV is Loan-to-Value. Whenever taking a loan on property valuation, the LTV ratio will be calculated by lenders. Let’s understand with an example, Shyam takes a loan against the property of Rs. 10 lakh, and Shyam’s property valuation is 20 lakh then the LTV ratio is 50%. At this stage, Shyam gets a lower interest rate because of the 50% LTV ratio.
When the LTV ratio is high, borrowers are taking loans with 80% of property value, interest may increase.
So, you should try to maintain a lower LTV ratio that will keep a lower interest rate on property loans.
Conclusion
Apply 24hr Loan tips for lower interest rates on property loans. You can save money on a loan against property if you get cheap interest. Also, you should compare interest rates with other lenders. Use the Home Loan EMI Calculator to check interest rates, repayment terms, and principal amount.
These will help to be organized and aware of monthly EMI and choose EMI as per borrower affordable.