Things to be Aware of Before Opting for Loan Against Property from Emirates NBD
Things to be Aware of Before Opting for Loan Against Property from Emirates NBD
Everyone
faces challenges in life – be it financial, career-related or personal. Financial
problems often push us to use savings we may have put away for a rainy day. In situations
like these, we can always take assistance from financial institutions or banks
in a form of loans. A good option, if you have property, is to take a loan against property as this
allows you to borrow more compared to personal loans.
What is a loan
against property, or LAP, as it is otherwise known?
A loan
against property is a secured form of a loan where your property such as a
house or flat acts as a security against the money you are borrowing. This type
of loan can be used for personal financing, business financing, medical
emergencies and so on. Since this is a secured loan, you can often borrow a
larger amount than unsecured loans.
Here
are some things to keep in mind before applying for a loan against property
1.
Your credit score
A LAP is a secured loan as
your property acts as collateral. However, financial institutions will still
evaluate your credit score before considering your application. Keeping a good
credit score helps you get loans on favourable terms.
2.
Other offerings in the market
The secret to choosing the
best loan is to do your research.
Although, you might need funds (money) urgently, it is advisable to research the
best the market has to offer in terms of interest rates. Due to rising interest
rates, it may benefit you to look at a longer tenure loan on a fixed interest
rate.
Some factors that influence interest rates:
-
Your
credit
score
-
Loan tenure and nature of
interest (variable or fixed)
-
Market
conditions
-
Nature
of the property – a newer, higher value property will always get you better
terms
-
Repayment
capacity – your income and ability to pay back will help you get a better rate
3.
Terms and conditions
It is very important to read the terms and conditions of the loan as
there can be hidden fees, terms for prepayment, and clauses which may give the
lender right to change the conditions of the loan. Skipping these may result in
surprises and shocks which may lead you to pay much higher than what you initially
borrowed.
4.
Paying back
Planning
out your repayment structure helps in making on time payments and not missing
out on payments as these could lead to penalties. You can consider early
loan settlement or partial
loan settlement.
For more information on Loans against property for UAE nationals and expatriates click here.
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