If you have a property, a residential or commercial, you can use that to apply for a secured loan- a loan against property (LAP). The best part is you can avail a higher amount of loan, even if you do not have a good credit score. The Loan Against Property Eligibility Criteria and the documentation process will also be minimal if you apply in an NBFC.

Where to use the Loan Amount?

> To Finance a Wedding – The dream of having a grand wedding can cost huge. To finance it, one can keep a property as mortgage and avail a higher amount of loan.

> To Consolidate the Debt – If you have more than one debt and you are paying EMIs of each one of them every month, it is better to consolidate them all as one loan. You can use the LAP to consolidate debts.

> To Purchasing Plant and Machinery – You can use LAP to purchase plant and machinery or upgrade their existing equipment. 

> To Finance Working Capital – A the initial stage of a business or afterward also, a business may need to put additional fund into it. You may need money to finance inventory purchase, pay taxes, or improve credibility. This money is known as working capital. This can be managed with a higher amount of loan. 

> To Expand the Business- You can expand to a new location, acquire a new business, add a new product, diversify product line, or any other, and a LAP will help you.

To know about the other factors, Visit: Loan Against Property for Higher Loan Amount

If you want to apply for an unsecured loan like a personal loan or a business loan, or a credit card, CIBIL score plays a vital role. Lenders will not allow taking a loan if your Credit Score is below 750. But, you cannot ignore the requirement of money in any situation. If you need money, you have to arrange it by any means. So, what is the solution?

If you have a property, be it a residential or a commercial property, you can utilize that to arrange the money. It is an easy way to finance your needs and requirements.

 Here, as a self-employed, you can get a loan up to Rs. 3.5 crores and as a salaried employee, you can get a loan up to Rs. 1 crore. Here, Credit Score plays a complementary act. With a moderate credit score, you can apply for a Loan Against Property at Low Interest Rates. But, it is not an applicable situation to have a bad credit score. 

Tips to Increase the Credit Score:

>Repay the Loan On Time- 

Do not skip or miss any EMI while repaying a loan. EMI miss may lower down your credit score and you may have to pay penalty fees, whereas regular payment of EMI will improve your CIBIL score.

>Apply for Small Loans and Repay them- If you take small loans and repay them on time, it will be reflected on your credit history and your credit score will increase.

To know about the other tips, Read: 6 Tips To Deal with Low Credit Score for Loan Against Property 

People often ask this question repeatedly, “how to find out if I am eligible for a particular loan or not?” This is not with one person or prospective applicant, whichever you would like to call them. It seems almost everyone planning to take a loan for the first time, or even for a second for that matter; faces the same dilemma. Thus, if you have been planning to take a loan, or apply for a loan - and you have been dealing with the same perplexity; take a look at the Loan Against Property Eligibility Criteria and measure your loan eligibility accordingly.

Every loan differs in nature, and thus, chances are their eligibility criterions will differ from each other, too. Thus, make sure to check the eligibility criteria of the particular scheme. For example, Ms. Anandi Raghuvanshi, a small businesswoman from Ahmedabad, was planning to take a loan against property but she wasn’t sure if she was eligible for it. She called the bank to inquire about the eligibility criteria, and the bank sends a list of criterions they were expecting Ms. Raghuvanshi to fulfill.

>Age: As mandatory for all kinds of credit schemes, the minimum age requirement for taking a loan against property is 25 years.

>Employment: As per this criteria, the applicant needs to be employed with a private firm or a government enterprise for a minimum of three years. Or, in case the applicant is self-employed, they need to have a certified business.

>ITR: The applicant must have filed his/her ITR for at least two preceding years from the date of application.

In the end, if you want to apply for a loan against property, these are the criterions you have to qualify. Read more: Know the Eligibility Criteria to Avail a Loan Against Property

Prepayment is when a borrower decides to use his savings i.e bonus from his employer, or any other amount received from a sudden financial breakthrough to pay off their loan and reduce their overall financial burden. Doing so has certain benefits which are unavoidable and lucrative in nature. Check them below.

> Savings on the Interest Rates

When your financial advisor suggests you to take a Loan Against Property at Low Interest Rates for a smaller tenor, it is said to save some of your money. A longer repayment tenor means a higher amount paid as interest towards the loan, which can be saved to a great extent by prepaying or part-prepaying the loan either in parts or in full, whenever the finances are in stable condition. 

> Reduction of Total Payable Amount

As explained above, prepayment of your loan against property, be it in parts or in full, help you lower down the payable interest i.e your total payable amount. Every time you contribute a significant amount for prepayment of your loan, your principal component decreases and the interest is re-calculated, resulting in a reduction of the financial obligations.

> Tax Benefits on Prepayment Amount   

Lastly, the amount that you use to repay your loan is eligible for tax deduction under section 80C and section 24 of the Income Tax Act on repayment of the loan. However, there are certain conditions applicable for claiming the same, and you must check them beforehand.