Loan against property is an ideal way to meet substantial financial requirements owing to the possibility to avail a loan amount up to 70% – 90% of a property’s value against a prolonged loan against property tenure. The available tenure for mortgage loans ranges between 2 to 20 years depending on your financial requirement and loan repayment capability.
Your tenure depends on various factors, some of which are given below:
- Loan Amount
It is advisable to opt for a longer tenure in case you avail a higher loan amount. This will make your EMIs affordable and ease the repayment process, thus reducing the burden on your pocket.
For example, if someone borrows Rs. 30 Lakh at 8% interest for a total of 24 months, the equated monthly instalments will be Rs. 1,35,682.
Now if you increase the mortgage loan tenure to 60 months your EMIs will be Rs. 60,829.
- Equated Monthly Instalments
It is better to opt for lower EMIs if you do not hold high repayment capability. Shorter tenure can make your EMIs expensive and strain your budget.
- Loan amount – Rs. 50 Lakh
- Interest rate – 8%
- EMI amount – Rs. 1,84,442
The loan against property tenure against the mentioned EMI amount will be 30 months. Reducing your EMI to Rs. 84,934 will cause your loan tenure to be increased to 75 months. Hence, consider your income and financial stability to determine the ideal tenure of your loan against property.
Various financial companies provide property loan at flexible repayment tenors. NBFC that offer Loan Against Property at competitive interest rates against minimal documents. You can also enjoy balance transfer facilities, online account access, substantial loan amount of up to Rs. 3.5 Crore, payment facilities, instant approval, faster disbursal within four days and other lucrative benefits on their mortgage loan.
This NBFC also brings you pre-approved offers to reduce the hassle of the application process and to save your time. These pre-approved offers are available on various financial products such as home loans, personal loans, home loans, etc. To take a look at your pre-approved offer, you only need to share minimal details like your name and phone number.
- Interest Rates
The shorter the mortgage loan tenure in India the lower interest rate you can enjoy. However, other components in the EMIs of an advance increases with a shorter tenure, making the repayments more expensive. Alternatively, longer tenure attracts affordable EMIs, but the total cost of the loan is higher than credits with shorter tenure.
- Loan amount – Rs. 40 Lakh
- Loan tenure – 50
- Interest rate – 8%
The EMIs will be Rs. 94,337 and the total payable amount for your loan will be Rs. 47,16,826.
If you increase the tenure to 80 months your EMIs will be Rs. 64,676 and the total amount payable against your loan will be Rs. 51,74,028.
- Age Of The Applicant
The age of an applicant will also play an important while determining the loan against property tenure. Borrowers with age below 25 can enjoy a longer tenure ranging between 2 years and 20 years, where individuals above the age of 50 will have a shorter tenure to make the repayments on their loan against property.
In case you have a variable income, it is advisable to opt for a longer tenure as it lowers the monthly EMI payments and helps keep your debt-to-income ratio low. It is essential that you maintain an ideal debt-to-income ratio below 40%. In case you have the required financial stability you can choose to prepay your loan against property to reduce your EMIs and lower the burden on your pocket.
You are also required to fulfil the minimum eligibility criteria to avail the loan against property tenure as needed. You can also use an EMI calculator and estimate your monthly repayments. The information you have to share to use these calculators is the loan amount, loan tenure and interest rate. You can alter the amount and tenure to determine the suitable EMI and total repayable amount.