Loan against property (LAP) is the most sought-after loan in these uncertain times. Be it for home renovation, higher education or any other personal requirement, borrowers prefer LAP over other form of loans. This is because it offers perceptible benefits in terms of tenure, interest rates and flexibility, to repay the loan amount. For financial institutions, LAP is a
secured loan as they get the property or home as a collateral security.
However, timely repayment of the loan amount is equally important. As you not only get peace of mind after becoming debt-free, but you also improve your creditworthiness.
Here is how you can repay the LAP on time -
- Choose an option that offer prepayment of loan without foreclosure charges: Before applying for LAP, do a thorough research andfind out which lender can provide favourable terms.Besides getting the best rates possible on LAP, the other important factor to look out for is prepayment terms.The option to prepay the loan without foreclosure charges is a game-changer. It will act as an incentive for you to pay back the amount before the tenure. At the same time, you will save money on the Equated Monthly Instalment (EMI) payments.
- Prepare a budget: You need to create a budget and start a spending plan. This way you will keep your focus on important goals like paying the dues first. You will also be able to keep track of your finances, which will save you from getting into a debt trap. More importantly, you need to follow this plan diligently.
Also Read: How Can LAP Help You Survive These Tough Times? - Delay the temptation to take another short-term loan: Keeping a tab on expensive purchases after obtaining a LAP is crucial. The temptation to go for short-term loan or personal loan to buy luxurious items such as fancy cars, high-end branded products is quite high. However, you need to understand that these expenses are discretionary in nature, which will create further pressure on savings. Hence, you should be careful and not give in to such enticement.
- Choose auto debit for EMI payments: Selecting an auto debit option for paying EMI ensures there is no delay in payment, and therefore, no late payment charges.
- Keep a tab on expenses: Adopt the classic thumb rule - do not live beyond your means until you repay the loan. It is easy to over spend on non-essentials in today’s online shopping world. So, till your loan is repaid, you need to be sensible about spending, be it during festivities or sale. Afterall, money saved is money earned!
Also Read: Rules To Follow While Taking A Loan Against Property - Formulate long-term investment plan: It is crucial to create a strong financial investment plan that will create wealth in long-term.Saving is just not enough. They also have to be properly invested to obtain higher returns that would also assist in repaying/prepaying of the LAP.
- Be alert to get best rates possible: Financial institutions come up with changes in interest rates on various loans. You should know about the lenders that can provide better rates than your existing one.Switch over if the difference is wider after taking into account the prepayment penalty on the existing loan, and processing charges of the new loan. Staying updated is important as you do not want to miss out on the opportunity of getting lower interest rates.
Also Read: Loan Against Property For Businesses To conclude The sooner you decrease the amount you owe to the lender, the less interest you have to pay. Prepaying and repaying the
loan against property on time sets you free from the financial liability so that you can focus on enjoying a stress-free life.
