5 Important Rules to Follow while Taking a Loan Against Property

Man giving loan to other

The requirement for extra funds can arise at any time interval. You have to search for secure variable options to meet your financial needs. Many financial institutions are in the market luring their customers with free credit reports, lower rates of interest, no application fees, superfast approvals, and whatnot. The customers applying for a loan are confused – how to choose the best deal?

Here we will try to guide the loan takers while going for a loan against property (LAP), with some golden rules to help them get the best online loan against property bargains.

Rule No. 1: Borrow only According to your Payback Capacity

Considering your repayment capacity is the most critical factor while going for a loan. Make it a point that you are comfortable enough to repay timely. Consider emergencies and opt for EMIs accordingly. As a thumb rule, an EMI should not exceed 50% of your total monthly income. Keep an eye on your daily expenditure and watch for any medical emergencies, child education, and other needs to get financially overburdened.

It is advisable to calculate an EMI by a loan against a property calculator.

Rule No. 2: Choose a Shorter Repayment Tenure

All financial institutions provide you with various repayment schedules. Remember that there is an inverse relationship between loan tenure and EMI. That is, for the longer term, the EMI will be low, and vice versa. Opting for the shortest loan tenure will ensure a lower interest burden. Although you may end up with higher EMIs, the total cost of the loan will be lowered when opted for a short period.

For example, a loan for 30 years of tenure may cost you to repay as much as the triple amount you claimed for.

Moreover, choose a flexible repayment schedule to increase your EMI when you have a better paying capacity in the future.

Rule No. 3: Maintain your Repayments Timely

Remember that you have to pay a heavy penalty for late payments. This will cause you to degrade your credit score, and simultaneously, there will be an increase in the loan’s overall cost. A well-maintained and disciplined repayment schedule is the key to increasing your worth in the eyes of financial institutions, and you may even be offered future loans at lower interest rates.

Make priorities of your expenditure and keep the EMI on top. I suggest paying one EMI in advance to help meet any financial emergencies and managing a well-structured repayment schedule.

Rule No. 4: Never take a Loan to Invest Further

woman investment in rupess

This is one of the most acceptable golden rules for most people applying for a loan. Never invest your borrowed money in any of the schemes you find lucrative.

Most high-yielding investments are considered to be very volatile. For example, investments in equities, gold, properties, etc., are at high risk. It is good to understand that going into debt for entertainment is the highest potential to forever pull you into a debt trap.

Rule No. 5: Keep your Family Informed of your Loan

A monetary burden is a part of the whole family, and you are not the only one who will enjoy a total loan. Discuss all financial matters with your family so that you may deduct monthly household expenses easily. Make a budget with all your family members’ consent and find more cost-effective measures to repay your EMIs comfortably.

Your family is a part of you, and they may have some additional money to spare in case there is a need for some extra funds.

Rule No. 6: Go through the Loan Documents Carefully

Don’t get excited when you are approved with a loan. Take your time to read all the terms and conditions before signing the loan documents.

This may feel tiresome, and most of the borrowers want to skip this step. The mortgage loans against property documents are lengthy, with some fine prints. Do not skip any of the lines and make yourself aware of all terms and conditions.

Thoroughly going through all the papers will ensure you understand processing fees, penalties, EMIs, and many other conditions. In case of doubt, feel free to contact your agent or the loan officer and get all your doubts cleared before signing.


It is advisable to research well while opting for a LAP. Be constant with your EMIs and make a habit of regular repayments. You can also opt for insurance coverage while applying for a more significant amount of loan. The cover will be helpful in instances when something unfortunate happens to you. A term plan to safeguard your family is always the better option while applying for a loan.

Every one of us faces challenges in life, and opting for a loan is one of the best solutions to help meet our financial needs.

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