Individuals may have multiple debts in the form of loans, outstanding EMIs, overdue amounts on credit card bills. Managing multiple debts with different interest rates and payment schedules can exhaust individuals both financially and mentally.
However, borrowers can resolve this situation by consolidating debt. There are various ways to consolidate debt, and one such is to take the help of a debt consolidation loan.
Ways to consolidate debt using the advantages of loan against property
Individuals avail loans against property by pledging immovable property to lenders. The secured nature of this financial product allows lending institutions to charge a competitive interest rate, which helps reduce the total borrowing cost. Thus, instead of handling multiple high-interest loans, borrowers can settle for the lowest interest rates on loans against property and reduce the repayment burden. Here are the ways one can use the advantages of loan against property:
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Utilise the large loan amount of loan against property
The secured nature of loans against property is another reason which enables lending institutions to provide high loan amounts. Lenders decide the loan amount depending on the property value and usually sanction 70%-75% of the property’s value as a loan amount. The amount is high when one deals with property worth Rs.1 crore or Rs.80 lakh. With such a high loan amount, individuals can pay multiple loans, outstanding credit card bills, etc.
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Manage repayments over a longer tenor
A loan against property usually comes with a long tenor. Individuals can clear multiple debts through a single debt consolidation loan, i.e., loan against property over a long tenor with ease. However, if they wish to reduce interest outgo, they can opt for a short loan against tenor. This will increase the EMI burden but help borrowers reduce the total borrowing costs.
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Pledge any kind of property
As stated earlier, a loan against property for debt consolidation can be availed by pledging immovable property, meaning individuals can pledge residential, industrial, or commercial property. Having different types of property allows individuals to tally the rate, offered loan amount value, and choose the right one. This increases the chances of securing a high amount to align with current debt.
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Fulfil simple loan against property for debt consolidation eligibility
Reputed Lenders offer loans against property at simple eligibility criteria due to the secured nature of this financial product. These criteria may vary from one lender to another and per employment status. For instance, a salaried individual must be working with a private, public or MNC, and their age must range between 28 to 58 years. On the other hand, self-employed individuals between 25 to 70 years must have a steady income.
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Submit essential documents
Accumulating loan against property documents, such as property-related documents, income proof, identity proof is essential to ensure a faster loan approval. The requirement varies as per employment status. Salaried employed have to provide salary slips, previous three months’ bank account statement, ITR, PAN, and Aadhaar card. Alternatively, self-employed individuals have to submit past six months bank account statement, address proof, PAN, and Aadhaar card. Individuals must have all these documents handy to avail a loan against property without any hassle.
- Opt for flexi loan facility
While availing loan against property for consolidating debt, individuals can choose Flexi loan facility. This unique facility allows borrowers to withdraw funds from the sanctioned limit as per requirement and pay interest on that utilised amount only.
Certain reputed financial institutions offer Flexi loan facilities while availing loans against property for debt consolidation.
These financers provide pre-approved offers to make the loan availing process hassle-free. These offers are also applicable for other financial products, such as a home loan. Individuals can check their pre-approved offers by providing their names and contact details.
- Look out for a loan against property balance transfer
Individuals servicing high-interest rates loans against property can transfer that loan to another lender, offering competitive interest rates and favourable terms. Here, they can use loan against property EMI calculators to find out the amount they can save by transferring the outstanding loans to a new lender.
Note: Borrowers can avail a loan against property tax benefit (under section 24 (b) of Income Tax Act) up to Rs.2 lakh on the interest paid, given the loan amount is used for financing a new home.
Individuals can efficiently consolidate multiple dues/obligations with the guidance provided above by availing loan against property for debt consolidation.
