Short Term vs. Long Term Loan Against Property Tenure

Short Term vs. Long Term Loan Against Property Tenure - Which Is Better?

Short Tenure vs. Long Loan Against Property Tenure - Which Is Better?_WC

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Short Tenure vs. Long Loan Against Property Tenure - Which Is Better?_WC

4 min 07 May 2024

Highlights:

Short vs. Long Loan Against Property Tenure
Tips to Help You Decide the Right Loan Tenure

A Loan Against Property is a secured loan under which a borrower pledges their property - residential or commercial - as a collateral in return for a loan. A Loan Against Property is a quick and convenient way to arrange money for any housing or business-related expenses. However, if you are planning to take a Loan Against Property, there are a few things you must keep in mind.

Talk to as many lenders as you can and negotiate for a low interest rate. Opt for the lender offering you a lower interest rate on a property loan as well as favourable loan terms and conditions. Researching options will take some time but it will be worth the effort in the end.

Make sure to choose the right Loan Against Property Tenure. While the maximum Loan Against Property loan tenure can typically stretch up to 15 years, it is advisable to keep your tenure short which can help reduce the overall interest outgo. However, they should also keep in mind the EMI amount while deciding the tenure. Why? Read on.

Short Tenure vs. Long Loan Against Property Tenure: Which is Better?

The right answer to this question would depend on your repayment capacity. If you are earning well and do not have any other loans, you can opt for a short tenure, if it suits your financial standing. However, if you have other monthly obligations and are not left with enough funds at the end of the month, you can opt for a long tenure based on your eligibility. This can keep your EMIs as manageable as possible.

How does one decide the best Loan Against Property tenure for them? This next section shares tips that can help you choose the right loan tenure.

Handy Tips to Help You Decide the Right Loan Tenure for You

First Decide What You Can Easily Pay Based on Your Monthly Income and Choose a Loan Tenure Accordingly

Figuring out the right tenure becomes easy when you know what you can easily repay. So, before taking a Loan Against Property, make a list of your fixed monthly expenses. This should also include your existing liabilities. Once you have done that, figure out how much money you are left with each month that you can utilise for your loan EMI payment

Once you know the loan amount and the EMIs you can easily repay, you can use a Loan Against Property Calculator to figure out the right tenure for you. The EMI calculator is quite easy to use. All one needs to do is enter three values: loan amount, rate of interest and tenure. In this case, you must keep changing the tenure until you reach a loan amount and EMI combination that works for you. Please note that your lender can change your tenure basis your eligibility and profile.

Decide Your Tenure Based on the Loan Amount You Need

One of the biggest benefits of a Loan Against Property is that it gives borrowers immediate access to a substantial amount of money. With the right property and right profile, borrowers can avail of Rs.5 Crore* or more, basis eligibility, with Loans Against Property. However, just because you are eligible for more funds than you require does not mean you should take that amount. It is advisable to borrow only what you need.

Also Read: Top Benefits of Loan Against Property Over Collateral-free Loans

It is suitable to opt for a tenure that offers manageable EMIs so that you can easily repay the loan.

Decide Your Loan Tenure Based on the Interest Rate You Have Been Offered

The interest rate on a Loan Against Property is an important factor that determines how convenient it can be to repay the loan. The interest rate offered to you depends on various factors, such as your CIBIL score, income profile, income and job stability, and the value of the property pledged as collateral.

If you are offered suitable loan terms with a favourable interest rate, you may choose a shorter loan tenure depending on your repayment feasibility.

Final Words

Loans Against Property offers substantial loans involving collateral. Borrowers should avail of these loans after careful planning. The right tenure will not only make the loan repayment more comfortable but also save you from defaulting on the EMIs.

Also Read: Easy Ways to Pick the Right Loan Against Property Tenure

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