5 Rules One Should Follow While Availing Loan Against Property

Applying for and availing of a property loan is a relatively simple and quick procedure in this digital era. A loan against property (LAP) is considered an ideal option when you require a high loan amount. You can pledge your residential or commercial property to get the loan. Lending institutions can provide a lump sum against your pledged property at an affordable interest rate after considering all important aspects like income, age, property type, etc.

Why Individuals Opt for a Loan 

  • A Loan against property allows you to use your property to meet your financial requirements. The value that has been locked up in the property can be utilized through a property loan.
  • You are free to use the funds as you want. 
  • You can continue to use your property as before. 
  • The lender can approve your loan easily if you are salaried, a business person, or self-employed.

Rules a Borrower Should Follow While Availing A Property Loan

Here are the five fundamental rules a borrower should follow regarding a property loan.

1. Gauge your financial situation to decide on the loan amount

A borrower should apply for a loan amount that they can repay conveniently. Applying for an amount that keeps your loan-to-income ratio within acceptable limits is advisable.  

If your EMIs take up a high portion of your income, your other financial obligations may be impacted. It can be retirement or your child’s education funds. Therefore, it is necessary to make a prudent decision after considering your other financial goals. Using a mortgage loan calculator to estimate the EMI amount before making a loan application is wise. It will help you know whether you can repay the loan within the fixed timeframe. It is a free tool that allows you to adjust the values as many times as you need to reach a satisfactory figure for loan EMI.

2. Consider availing insurance for a larger amount of property loan

Generally, mortgage loans are long-term debts. Experts recommend borrowers buy a term plan. It is a safety cushion for your family members. It ensures that they do not face any financial difficulty in the future.

3. Apply for a shorter-term loan.

Many borrowers consider a long-term loan to reduce the loan EMI. The longer the loan repayment tenure, the lower the EMI will be. However, an individual should apply for a loan for a shorter repayment tenure to reduce the interest burden. Generally, property loans are provided with a tenure of between 1 – 15 years. You can choose a convenient short-term loan tenure.

4. Making timely repayment of the loan is vital

Timely repayment is the most important rule for taking any loan. Mortgage loan borrowers must be more disciplined as they have pledged their assets. Missed EMIs may lead to loss of the asset. Timely EMIs keep your repayment organized. It also saves you from massive amounts of delayed fees and accrued interest on dues. To avoid such unfavorable circumstances, make sure you pay timely EMIs. Delayed payments are recorded in your credit reports that reduce your credit scores. A reduced score minimizes the probability of loan approvals in the future.

5. Read the fine print carefully 

Reading the terms and conditions of a property loan is crucial. You should read each point of the loan agreement carefully to avoid unpleasant surprises during the loan term. You may find your lender charging an additional fee which can increase your borrowing cost. It is a good practice to make an informed decision beforehand rather than regret it later. Generally, most information about the loan can be checked on their official website so that you would not be surprised during the loan application.


Following these rules will help you conveniently repay the loan. Potential borrowers can apply directly through the lending institution’s official website. You can look for a renowned and reputed lending institution to get loan approval online by following easy steps and using a mortgage loan calculator.

Also Read: Things to Consider Before Investing in Real Estate

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