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10 Tips to be Aware of While Taking a Loan this Festive Season

10 Tips to be Aware of While Taking a Loan this Festive Season

There are so many great loan against property offers during the festive season that one is bound to get intrigued. Even if you don’t have any urgent requirements, there are chances that you might schedule them according to these offers to save a bit. But there are still a lot of things that you should be careful about while taking a loan against property.

In the same context, let’s highlight ten such points that every borrower should be aware of, especially during this festive season. It will keep you from being lured into financing services that might not be good for you. Also, whether you are a first-time borrower or a veteran, these ten tips will always come in handy.

1. Borrowing More

The first mistake that a lot of people make while taking a loan against property in India is acquiring more than what they need. Even if the offers are great during the festive season, you should never do it since it will only increase the pressure of repaying the debt.

2. Long Tenor

An extended loan against property tenor means having to pay more interest on the borrowed amount. So, even if you have attractive festive offers going on, make sure to opt for a short tenor loan.

3. Regular EMIs

Once you have borrowed a loan against property, there is nothing more important than paying your EMIs. People who miss out on their repayment are more prone to getting a bad credit rating. It can also keep you from getting additional loans in the future.

4. Borrowing Unnecessary

Just because, a loan against property eligibility criteria is straightforward during the festivals, It does not mean you should borrow to cater to your unnecessary expenses. A credit scheme should never be used for investments and splurging.

5. Loan for Insurance

Another point to keep in mind while borrowing a loan against property during Diwali is not to purchase insurance with the amount. Although the offers look tremendous and might be cheaper, an insurance policy will still not give you as many benefits.

6. Interest Rates

Financing agencies provide a lot of new Loan Against Property Interest Rates features during the festivals. That is why you should not invest in the first one that you come across. Instead, try searching for better interest rates and features by getting in touch with different financing firms.

Loan against property interest rates

The rate of interest is a critical factor while deciding the most suitable loan against property for home renovation. You might think that a loan is an expensive alternative for getting your renovation expenses sorted. But with adjustable interest rates, it becomes one of the most feasible options. The following are the factors which help decide the interest amount.

1. Floating interest

With this kind of interest calculation method, the instalment amount can change depending on the market.

2. Fixed interest

Fixed interest rates provide you with a more systematic outcome since they never change during the repayment tenor.

3. Risk-based interest

When, the interest rate for a loan against property for home renovation, is calculated based on risk. The amount is decided by the organisation depending on the risk involved in the transaction.

7. Read Between the Lines

The most crucial point to remember for any borrower while taking a loan against property is reading between the lines. By this, it means you should pay attention to the fine print information as it might include critical details about the transaction.

8. High-Cost Loans

A high-cost loan against property should be avoided under all conditions. Even if you have already borrowed money from multiple sources then try to combine it under one low-cost loan. It will save you a lot of hassle and interest.

9. Loans Over Savings

We all have the habit of dipping into our savings rather than borrowing a loan against property among other loans. However, if you are getting great offers during the festive season then make it a point to take credit. It will make sure that you do not compromise on your retirement for today.

10. Making People Aware

Most of us do not like to share our financial situations with others. But when it comes to a debt, you should always make your family aware about the same. You can start by sharing with them the loan against property documents required to understand the scheme better.

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