A loan against property or property loan is one of the most feasible options that one can opt for at a time of financial crisis. As the property loan rates are economical, they are quite popular among borrowers. However, before deciding to opt for this loan, prospective applicants must be aware of the current property loan interest rates to make an informed decision. The property loan interest rates among other factors, are also affected by the change in repo rates by the Reserve Bank. Thus, as a borrower, one must be fully aware of all the factors while availing of this type of loan. Let us now discuss all about the current interest rate of loan against and property and the factors affecting its repayment.

Factors Influencing Your Loan Repayment

The main factor influencing property loan repayment is the property loan interest rates. They in return affect your loan repayment capability. Once you know all about the current interest rate of loan against and property (lies approx. between 9-14%), it will be easier to understand your loan repayment capability.

CIBIL Score

The CIBIL Score of the applicant is an important factor influencing the property loan interest rate thus influencing the borrower’s ability to repay the loan. A high credit score of 750+ shows the borrower’s credibility and history of paying all debts and EMIs on time and gaining competitive property loan interest rates. This makes loan repayment much easier.

Age of the Applicant

A younger applicant may get lower property loan interest rates than an aged applicant for whom the loan repayment tenor becomes lesser and interest rates steeper.

Employment & Income Status of Applicant

Lower property loan interest rates may be charged for salaried individuals due to higher job/income certainty while self-employed applicants with irregular income may be charged higher interest rates due to their risky profile and financial instability thus affecting their loan repayment ability.

Loan Tenor

Longer loan tenor makes loan repayment easier. However, longer loan tenor may attract higher rates of interest as here the chances of default increases and this certainly affects the loan repayment ability of the borrower.

Property Profile

Property loan interest rates are also influenced by the property being used as collateral. The location, age, value, surroundings, overall condition, and market value of the property also decide the interest rates. A property in a prime location has a higher demand and resale value and attracts lower interest rate than an old property. Thus, this factor also influences the repayment ability of the borrower.

Have a look at my other article on Process of Loan Against Property by Knowing the Required Documents

Other Factors

Other economic factors like inflation, repo rates, and other govt. policies also influence the interest rates on all types of loans. So, these factors also influence the loan repayment capacity of a borrower indirectly as they influence the property loan interest rates.

Final Words

Thus, we have seen that property loan interest rates affect the loan repayment capacity of the borrowers to a great extent. So, low property loan interest rates are favorable for loan applicants as they help to repay the loan easily while not having to deviate much from their planned budget.