Factors affecting the tenure of your Loan Against Property
If you are looking for funds to meet your high-end expenses, loan against a commercial or residential property is a secure and quick solution. Whether you are financing your wedding expenses, expanding your business, purchasing new land, servicing unexpected medical expenses, or planning a vacation, you can always apply for a loan against property.
This makes it a secured loan as the repayment is guaranteed by the borrower by using his/her property as collateral. As a result, it attracts lower interest rate as the lender is assured of repayment through one way or the other. This makes the repayment installments (EMIs) of the loan much more affordable.
Apart from EMIs and interest rates, tenure of the loan is an important factor that needs to be considered before availing a loan against property from a bank or non-banking financial institutions. Borrowers can customize the loan tenure according to their repayment capability.
There are various factors which play a deciding role in determining the tenure of your loan against property:
- Loan amount
The loan amount you need impacts the tenure of the loan directly. Usually, the higher the loan amount, the longer the tenure will be. The longer tenure eases the repayment of loans since it reduces the EMIs as the amount of loan spreads out over a longer period, thereby reducing the burden of repayment on your monthly budget.
Longer tenure also increases the eligibility for a higher amount of loan against your property. Online calculators are available to calculate the eligibility and best tenure for your required amount of loan.
- Interest rates and EMIs
The interest rate on your loan and the subsequent EMIs plays a vital role in deciding the tenure of the loan. If you wish to have low EMIs, it will have a long tenure. On the flip side, if you are comfortable with paying higher EMIs, you can opt for short tenure and save on the interest amount.
The interest rate on the loan amount directly affects the EMIs. Lower interest rate results in a reduced EMIs which in turn can shorten your loan tenure. On the other hand, higher interest rates will increase the payback amount and hence the tenure will also be longer.
- Your age and income
Your current age and income are also crucial in determining the tenure of the loan against your property. If you are in the 30s or early 40s, you can opt for a long tenure but if you are nearing your retirement age, you need to shorten your loan tenure as your income may stop or reduce after your retirement. Consequently, your tenure will also depend on your net income and expenditures.
If you have fluctuating income, it’s better to choose a long tenure so as to safeguard your CIBIL score for future access to loans. There are plenty of online EMI calculators to assess your income and determine the best loan tenure for your loan amount.
A loan obtained by mortgaging your property is an efficient way to raise funds for tackling large personal or business expenses. It’s also important to choose the right tenure for your loan considering the above-mentioned factors.
Reliance Money offers loans against property at affordable interest rates and options to customize your tenure to meet all your financial obligations. You can check your eligibility and apply online here.