Debt consolidation is a process in which individuals can pay off multiple loans by availing a single loan. With lower interest rates, individuals may easily become debt-free in a short span. While a debt consolidation loan may involve fixed and variable interest rates, its terms might vary according to the income and creditworthiness of an individual. Usually, individuals opt for a loan against property to consolidate their debts since it is affordable and ensures hassle-free approvals.
Benefits of a debt consolidation loan
Here are a few benefits of debt consolidation loans:
- Simplifies payments
In a debt consolidation loan, one has to make a single monthly payment which reduces the chances of missed payments. Paying off multiple debts in a single month often creates unnecessary confusion, leading to delayed payments. However, with a debt consolidation loan, an individual can minutely track and monitor the progress of their debt repayment.
- Fast debt repayments
With a debt consolidation loan, one can repay debts earlier than anticipated. Individuals may make extra payments from their savings if these loans involve lower interest rates than the individual loans. Consequently, one may save large amounts of money in the long run.
- Improves credit score
A credit score between 700 and 749 is necessary to get loans approved by best licensed money lenders Singapore. However, multiple loans usually negatively impact the credit score and mitigate the chances of loan approval. A debt consolidation loan will improve the credit score since it enables individuals to pay off other long-standing debts.
- Lower interest rates
Unsecured loans (like personal loans) burden individuals with high-interest rates, causing them to pay higher debts every month. With debt consolidation, one can merge multiple loans into a single loan with lower interest rates. Furthermore, individuals who avail loan against property may enjoy even lower interests and a longer tenor that may extend up to 18 months.
Availing a debt consolidation loan against property is the most common option. With this, one can avail a loan while pledging an asset as collateral.
Loan against property eligibility criteria
Below mentioned are the eligibility criteria for availing a loan against property
- Individuals must be residing in an Indian city
- Individuals must be a citizen of India
- Salaried individuals must be aged between 28 and 58 years
- Self-employed individuals must be aged between 25 and 70 years
- Salaried individuals must be working in a public, private or MNC for at least three years
- Self-employed individuals must be involved in a business for at least five years
Documents needed for availing a loan against property
Mentioned below, are the documents needed for a loan against the property
- Identity proof like PAN, voter ID card, driver’s license or passport
- Income proof like bank account statements and Income Tax Returns
- Property documents like title deeds, buyer agreements and property tax receipts
- Documents related to businesses(for self-employed individuals)
How to apply for a loan against property?
Here is a step-by-step guide that will guide individuals in the application process for a loan against property
Step 1: Visit the official website of a preferred lender
Step 2: Navigate to the products section and click on ‘loan against property
Step 3: Carefully go through the eligibility criteria
Step 4: Click on the online application form and fill it up using accurate details like income and financial status
Step 5: Cross-check all the details and click the submit button
After successful scrutinization of every detail, the lender will send a letter of sanction to the borrower. Then, borrowers receive the loan amount credited to their accounts.
Things to keep in mind while applying for a loan against property
While a consolidation debt loan against property will enable individuals to mitigate their burdens, one must carefully consider the following points.
- Debt repaying ability
Individuals must avail a reasonable amount of loan which they can easily pay within said tenor. Nobody knows the financial status better than the borrower who is planning to apply for a loan. So, individuals must minutely evaluate their income and apply only when they are financially stable enough to repay the loan.
- Dispute free property
The property that one wishes to keep as collateral needs to be free from any dispute to avoid confusion and chaos. Furthermore, a property that is under dispute usually leads to the rejection of a loan application.
- Value of property
The amount of loan that a lender provides depends on the present value of a property. Consequently, individuals must evaluate the current property valuation and then decide if they wish to keep it as collateral.
- Suitable time frame
Individuals must carefully choose an appropriate tenor of loan repayment. While a longer tenor ensures lower EMIs, it is best to get a vivid idea through a loan against property EMI calculator. Depending on the present financial status and loan repayment ability, an individual must choose the tenor.
- Rate of interest
While the rate of interest in loans against property is much lower compared to other loans, one must carefully conduct thorough research and pick the lender who offers the best rates. One must never hurry and make a wise decision.
Several lenders extend pre-approved loan offers to their existing customers. It ensures a seamless loan sanctioning process and is available on home loans and LAP. Borrowers may check their pre-approved offers by simply entering their name and contact details.
Lastly, one must consider other factors like the physical structure of the property and whether it is leased or not. While opting for a debt consolidation loan, it is best to avail a loan against property.