Much like home loans, loans against property are also long-term loans. Therefore, it is crucial that one avails of these loans at the lowest interest rates possible. Securing a low-interest rate loan against a property deal is crucial as low-interest rates not only help one keep their EMIs pocket-friendly but also allow keep the cost of borrowing the loan to the bare minimum. In this article, we share with our readers some tips on what they can do to keep their loan against property interest rates as low as possible. 

Handy Tips That Will Help You Secure a Low-Interest Rate Loan Against Property 

1. If wish to avail yourself of a low-interest rate loan against property, pledge a high-quality collateral. Properties with high resale value are seen as high-quality collaterals by lenders as these properties lower the risk involved for a lender. In case of loan default, the borrower can sell the pledged property for recovery of loan money. Properties located in central locations and properties located in new apartment buildings equipped with all modern amenities have high resale value and are therefore counted as high-quality collaterals. On the other hand, properties located on the outskirts of old properties are seen as low-quality collaterals. Pledging high-quality collateral will help you avail yourself of a low loan against property interest rates and pledging a low-quality collateral takes away a person’s negotiating power. 

2. If you are applying for a loan against property, know that your lender will decide on your loan application after checking your credit score. A credit score above 750 indicates high creditworthiness and repayment capacity. Borrowers with such a credit score are quite unlikely to default on loan repayment and therefore, get offered loans against property at the lowest interest rate possible. On the other hand, borrowers whose credit score lies below 750 find it difficult to get approved for a loan and avail of the loan at low-interest rates. So, if you are planning to apply for a loan against property, make sure your credit score is 750 or above. 

3. Go for a low loan-to-value ratio loan. Under loans against property, borrowers can borrow up to 70% of a property’s value as a loan. Loan-to-Value ratio refers to the percentage of one’s property value that can be sanctioned as a loan. A high loan-to-value ratio loan increases the risk for the lender and therefore, in the case of high LTV ratio loans, borrowers are not able to avail themselves of a low-interest rate. On the other hand, a borrower can increase their chances of availing of low-interest rates by opting for low loan-to-value ratio loans.