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A loan against property is one of the best financing options at a lower rate of interest for dealing with an unexpected financial crisis or meeting significant goals such as home purchase, a child's higher education, or funding a wedding. As the name suggests, the funds offered under this loan are secured by pledging a real estate asset as collateral to the lender.
Given the secured nature of this loan, when you apply for a mortgage loan with Hero FinCorp, we charge a lower interest rate on the funds disbursed. However, several factors influence a loan against a commercial property interest rate, and it is recommended that you become familiar with them before applying.
Whether you require funds to set up a new business or to deal with a medical emergency, Hero FinCorp is always there to financially support you with our affordable mortgage loan. We charge an interest rate on mortgage funding after reviewing various parameters such as your income, occupational status, and the condition of the commercial property in question. So, if you have a regular income and a commercial real estate property in good condition, visit Hero FinCorp now to apply for a loan against property.
At Hero FinCorp, you can choose between fixed and floating mortgage loan interest rates. Here is what these rates mean and how they are calculated.
Under this mortgage loan arrangement, the interest rate is fixed and remains the same till the conclusion of the loan term. A fixed interest rate is charged on the outstanding loan balance, and as the loan tenure passes, you are required to pay a lesser amount towards interest and more on principal outstanding.
You can compute the EMI for a fixed interest rate mortgage loan using the following formula
E = [P x R x (1+R)^N] / [(1+R)^(N-1)]
Here,
E refers to the Equated Monthly Instalment Amount
P stands for Principal Mortgage Loan Amount
R means applicable Rate of Interest
N is the Repayment Period in months
We consider the following aspects while deciding on a loan against the commercial property interest rate applicable to your profile:
Age is crucial for establishing a property loan interest rate. If you are nearing retirement or have recently begun your career, the lender’s risk is assumed to be high. As a result, such profiles may attract a higher interest rate.
A property's location and condition significantly impact mortgage interest rates. A city-center property with nearby amenities qualifies for lower interest rates. Likewise, a well-maintained property, free from leaks and cracks, secures loan approval at a lower interest rate due to its higher resale value, influencing the lender's risk perception.
A credit report is issued by authorised credit bureaus, and it consists of details of your financial behaviour in terms of debt repayment. If your credit report reveals missed EMIs, loan settlements, multiple hard inquiries, and loan defaults, your application may be rejected, or you will be approved for a higher interest rate mortgage loan.
Although the funds offered under this loan are secured by high-value real estate assets, lenders still want you to be in the high-income bracket to sanction funds at a lower rate. The higher income assures the lender that their funds are safe and that a default situation is unlikely.
If you have an average credit profile and your income barely meets the lender's qualifying criteria, it is preferable to take out a smaller loan to reduce the credit risk associated with your profile. A lower loan amount might help you secure funds at a lower mortgage rate.
The type of property being offered as collateral matters. Residential properties may have different interest rates than commercial properties. The location and condition of the property also influence rates.
If you have an average credit score and meet the lender's eligibility requirements, you should consider adding a co-applicant. A co-applicant could be your spouse or parents with a good income and no previous default history.
You can make your EMI more affordable by choosing a longer repayment period. If you have a low income, extending your tenure allows you to manage your debt without jeopardising your budget, while allowing lenders to approve funds at a lower rate.
If you have a secondary source of income and are earning a decent and consistent income from it, include it on your loan application. Additional income increases your repayment capacity and qualifies you for a low-interest loan against commercial property.
If you have various ongoing debts in your name, you are more likely to have a poor debt-to-income ratio. Before submitting your mortgage application, if your budget permits, foreclose some of your existing loans to improve your debt coverage ratio and qualify for a lower interest rate mortgage loan.
When applying for a mortgage loan, you should consider the following factors in addition to the loan against the property interest rate.
Before signing, examine your loan against property agreement carefully. Review the mandatory fees, such as processing fees, as well as situational fees, such as rescheduling and prepayment fees. Also, keep an eye out for foreclosure provisions.
Scrutinise your preferred lender's qualification criteria, and only go with them if your profile perfectly matches their requirements. It will expedite the approval process and qualify you for a lower mortgage rate.
A loan against property can assist you in dealing with a variety of financial crises, particularly a medical emergency. As a result, it is critical to examine how long your lender takes to disburse funds.
Before deciding on a lender, determine whether the maximum amount offered by your preferred lender is sufficient to meet your financial needs.
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