Loans against property or property loans are long-term loans with the long tenor going up to 18 to 20 years. With such a long repayment tenor, it becomes crucial that one avails themselves of the lowest property loan interest rates possible. Low property loan interest rates translate into low EMIs and low costs of borrowing a loan. Today, property loan interest rates start from as low as 8.50% per annum but can easily go much higher. In this article, we discuss some tips on what borrowers can do to avail themselves of the lowest loan against property interest rates possible. 

Tips on How to Avail Yourself of the Lowest Loan Against Property Interest Rates 

1. Loans against property are loans backed by a collateral. Thus, the quality of the collateral is crucial here. The collateral provides a risk cushion for the lender for the lender can sell the pledged property for the recovery of loan money in the case of loan default. Not very surprisingly when borrowers pledge a high-quality collateral, i.e. a property with high resale value, lenders offer them a lower and better property loan interest rate. On the other hand, when the pledged collateral is an old property or a property located outside the city with no good resale value, lenders generally charge a higher rate of interest on the loan against the property. Borrowers are therefore advised to buy high-quality collateral.

2. Your credit score will also play a key role in helping a lender decide the terms and conditions on which to extend you a loan. Individuals with a high CIBIL score are people who can be trusted with timely repayment of loan money. On the other hand, individuals with a low CIBIL score pose a certain amount of risk to the lender and therefore, lenders do not easily sanction loans to individuals with low-interest rates or even if they do, they do so at a high rate of interest. To be eligible for a loan against property in India, one must have a CIBIL score of at least 750 or more.

3. The loan-to-value ratio you opt for will also affect the interest rate you get on your loan. High LTV ratio loans pose a higher risk for lenders and therefore, lenders charge a higher rate of interest on these loans, primarily to cover up for the risk they are taking in lending money to someone who cannot be completely relied upon concerning timely loan repayment. On the other hand, individuals who keep the LTV ratio low, i.e. avail of a lower loan amount concerning the total current market value of their property, are easily able to ask for and receive low-interest rates on their loan against property.

4. Lastly, the loan tenor you opt for will also impact your loan against property interest rates. A long repayment tenor increases the risk for the lender and therefore, most lenders charge a high rate of interest on long tenor loans and vice versa. 

In conclusion, if you wish to avail yourself of a low loan against property interest rates, pledge high-quality collateral, maintain a good CIBIL score and a low LTV ratio and try and repay the loan as quickly as possible.