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Important Factors that Influence Loan Against Property Tenure

The decision to take a loan is in and of itself a difficult one. At times, taking a loan is absolutely unavoidable, and you will have to offer up some kind of collateral to the financial institution of your choice before they hand over the required funds. Thankfully, an LAP, or a loan against property can help you in such situations. These loans are also known as home equity loans and are designed specifically for home owners who need liquid funds urgently. Since you offer up your home as collateral on these loans, they generally have lower interest rates than other personal loans, and the money you receive can be used to fund a family wedding, expand your business, or pay off medical bills.

Before you decide to apply for such a loan, let's take a look at some important factors that can influence the tenure of your loan against property:

  1. Loan Amount: The higher your loan amount, the longer your home loan tenure is going to be. This is beneficial to both parties, as the value of the security with the lending entity isn’t likely to depreciate too much over time, and the borrower isn't put under significant stress to repay the amount quickly.

  1. Mortgage Interest Rate: LAP follows a simple procedure where your interest rate is directly proportionate to your mortgage loan. If your mortgage interest rates are low, your EMIs will also be low, and this will lead to a longer tenure.

  1. Borrower’s Age: Your age is one of the most crucial factors that will determine your tenure. Ideally, borrowers would prefer it if you finish repaying the loan before you hit the age of retirement. This means that younger applicants are likely to be offered a longer tenure that their older counterparts.

  1. EMI: Your tenure and EMI always go hand in hand. You can use a loan against property EMI calculator to figure out your monthly instalments. If you have the capacity to pay higher EMIs, your tenure will be shortened.

  1. Interest Rate: Loan against property interest rates may differ from one entity to another. However, most LAP interest rates are generally quite low when compared to other types of loans.

While these are just a few things that can affect your tenure, factors such as the age of the property, condition of the property, and its resale value could end up affecting your loan amount. Based on your available collateral (your home), you can also use any number of online loan against property calculators to get a better understanding of the kind of loan amount financial institutes may be willing to offer you.
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