If you are facing a shortage of funds for a medical emergency or an important event, such as a marriage or education, your own property might come to your rescue by availing Citibank loan against property. It is a secured loan against your residential or commercial property where you could get a lower interest rate. Both salaried and self-employed candidates can apply for this type of loan.
Don’t jump the gun remains the wise phrase which you should keep in mind while availing of a PNB loan against property. It’s possible that in the process of getting quick credit, you ignore key facts and procedures that lending institutions follow before approving a loan. When choosing a Citibank loan against property, it’s critical for you as the borrower to understand the critical aspects determining your loan eligibility and disbursement. If you are applying for a PNB loan against property anytime soon, there are things you shouldn’t do:
Applying for larger loan amount: It is best to apply for a loan amount that you can easily repay, even though you may need a larger loan amount than the value of the property. Try to determine your debt-to-income ratio and the amount you can set aside for the monthly EMI in order to pay off your loans quickly.
Missing EMI payment: Once the loan period starts, avoid skipping the EMI because the bank will likely impose late payment penalties. Additionally, missing loan instalments lowers credit scores. This has an impact on your ability to borrow money in the future.
Not knowing about Tax Deductions: If you borrow money to buy a new house, you can claim tax deductions on interest payments under Sections 80 C (1.5 lakh), 24B (2 lakh), and 80EE (3.5 lakh) up to a total of 3.5 lakh (Rs 50,000). Only a first-time buyer is eligible to get tax incentives under the aforementioned acts. A first-time buyer may claim up to Rs 4 lakh in total, including tax incentives. A customer who is a businessman can claim the full interest on a Citibank loan against property under section 37(I) of the Income Tax Act. You can also claim tax deductions for the expenses incurred over documents required for a pnb loan against property.
Not making Interest rate comparison: A variety of factors are taken into account when determining the interest rate that is charged to consumers. Researching and comparing the best interest rates and repayment schedules will help you get the best rates.
Not selecting the right loan tenure: A borrower must still choose the loan tenure because a Citibank loan against property is a secured loan with a longer repayment period than personal loans. Loans which have a longer tenure have the benefits of lower EMIs, but a higher interest cost is associated with this. In contrast, loans with a shorter tenor help in reducing the burden of the higher interest costs. Selecting the appropriate tenure is extremely important and totally dependent on the ability to repay and other obligations.
Not writing down the correct value of your property: A borrower can believe that their home has a higher market value than others, but this may not be the case. Lenders will do their due diligence to determine the correct value of your property. The lending institution has the option to accept or delay your application if the borrower declares an inflated value on the application form. Therefore, borrowers should declare an accurate value after consulting with the relevant authorities.
Extra fees: As a borrower, you may think there won’t be any fees in addition to the property loan’s interest rate. This may not be the case because lending companies impose extra fees to process loans, foreclosures, and prepayments. To avoid any surprises at the last time, it is imperative you check on additional charges that would be imposed on your Citibank loan against property application.
Existing loan liabilities: A lending organization that facilitates a loan to a borrower would cross-check with credit bureaus and other institutions to see if any current loans are active with the borrower who has applied for a pnb loan against property. Your loan application may be denied if the evaluation reveals irregularities in the repayment of previous loans or a low credit score. Borrowers must ensure that their borrowing credentials are reliable, and they must fix any anomalies with credit bureaus and financial institutions.
Not factoring in processing fees: Most lenders charge processing fees between 1% and 2% of the loan amount. LAPs are often large-scale loans. Therefore processing fees could be high. Therefore, before completing the final LAP application, loan applicants should account for processing fees levied by various lenders. According to RBI regulations, there are no prepayment penalties for LAP if it was obtained at fluctuating interest rates. But lenders who offer LAP at fixed interest rates have the right to charge prepayment or foreclosure fees. Consider picking floating interest rate LAP over fixed interest rate LAP because prepaying fixed rate LAP could cost you a significant sum of money.
Not factoring in disbursal time: Disbursement of LAPs takes two to three weeks since lenders must confirm all papers related to the property and conduct a technical analysis to determine the property’s market worth before approving the application. LAP may not be a good option for those who need quick cash. Such applicants want to think about obtaining a personal loan or another type of loan with a more expedited application process.
Excluding LAP EMI from the emergency fund: Financial emergencies, including illness or job loss, can occur at any time and have a negative impact on your ability to pay back loans as well as your cash flow and revenue. Borrowers should take into account their current EMIs in their emergency situation to help reduce the financial risk brought on by such unanticipated expenses. It is recommended that as soon as you start planning for LAP, you should increase the size of your emergency fund by at least six times the expected EMI of your pnb loan against property.
When you are certain about your loan application, submit it for a pnb loan against property with conditions that work for you. Loans secured by property can be used to pay for renovations, education, business expansion, and other charges, allowing you to pursue your goals and requirements despite financial constraints.