Lending institutions predominantly extend financial assistance to working professionals or self-employed individuals. There are also various financial institutions that give loans against property to retired individuals. With this loan for pensioners, individuals who have just gotten released from their professions can fulfil their financial obligations.
In this regard, it may be difficult for individuals to choose a suitable loan offer to choose from multiple alternatives provided by several lenders across India. They must know the things to look for while selecting a loan offer.
Factors to Consider While Applying for A Loan for Pensioners
Here are some factors individuals need to carefully check while applying for a loan against property for the pensioners:
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Comparing interest rate
One of the primary things that attract individuals when selecting a property loan for pensioners is the interest rate. This is because interest is the major component of instalments and the overall loan obligations in a debt.
Borrowers can significantly reduce their loan obligations by securing a lower interest rate. Even a difference of 0.5% borrowing rate also can fluctuate the borrowing cost to a large extent.
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Applicable charges
Besides the interest rate, pensioners must also be mindful of all the charges integrated with the loan offers. A loan against property for pensioners includes several charges, such as processing fees, GST, penal interest rate, bounce charges, mortgage origination fees, etc.
All these fees also influence the overall borrowing cost. In order to tap the most advantageous loan offers out of all the available alternatives, individuals need to compare lending institutions against these charges.
There are also several lending institutions that do not take foreclosure or part prepayment charges. Individuals can keep their borrowing obligations to a minimum by taking loans from such lenders. In this regard, they need to know strategies that can help them pre-pay loans easily.
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Knowing the loan-to-value ratio
Loan-to-value (LTV) ratio is the maximum percentage of the current market value of collateral a lender gives to borrowers. On average, the lending institutions in India offer an LTV of around 75%. It may vary across lenders.
Individuals needing a sizeable credit out of their mortgaged property need to select a lending institution offering a higher LTV ratio.
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Determining the value of property
As mentioned earlier, the maximum loan amount (LTV) depends on the property’s current market price in a mortgaged loan for pensioners. Therefore, before taking the loan, individuals need to carefully appraise the value of the immovable asset they will mortgage.
The market price of the same property may vary considering the location, conditions, reputation, amenities, etc. Therefore, Individuals must know how much their property is worth before mortgaging it for a loan against property.
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Checking the loan eligibility criteria
As loans for pensioners are generally designed especially for senior citizens, the eligibility criteria for this kind of property are also different. Individuals need to check the eligibility requirement properly before approaching a lender. This will help them avoid the unnecessary chances of getting rejected by the lenders.
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Estimating the required amount
Before opting for a loan against property, individuals must estimate the total amount that they will require to meet their impending expenses. This way, they will not have to take multiple loans and engage in repaying all of them separately. They can also reduce their probable loan repayment burden.
By following the above mentioned factors, individuals can make informed decisions regarding loans. In addition, they will also need to know what they need to avoid while applying for this loan against property.
In this regard, individuals need to keep in mind that several lending institutions extend tailored pre-approved offers for their customers on their products, such as loans against property and home loans. By obtaining this offer, they can expedite their loan application process. They just need to mention their names and contact details to check their pre-approved offers.
In conclusion, loans for pensioners enable individuals to meet their financial requirements easily. They can get a sizeable amount for a long tenor and repay the debt easily. They need to check and compare the loans extended by several institutions before taking the credit facility to avail of the most advantageous offer.
