Debt consolidation is one of the best financial strategies you can opt for when juggling between multiple loans, credit card or other financial obligations. There are multiple ways for consolidating your debt, but today, let’s talk about consolidating your debt with the help of a Loan Against Property (LAP). Read on!
What is Debt Consolidation?
Debt consolidation is a financial process where you take a loan to consolidate your existing debts into a single loan. This helps you in managing your finances by simplifying your payment and lowering your interest rate.
For example, you have 5 different kinds of credits with different interest rates and EMI repayment dates. This can create confusion while repayment and can impact on high-interest debt cycle payments to multiple lenders. To solve this issue and gain financial stability, you can consolidate your debts into one single debt. This will not only simplify your loan repayment but also help you manage your monthly budget with ease.
But can you consolidate your debt with a Loan Against Property? Let’s understand it in the next section.
What is a Loan Against Property
A Loan Against Property (LAP) is a secured loan where you pledge your property as collateral to borrow an amount. This can help you with debt consolidation by allowing you to combine multiple high-interest debts into a single loan with lower interest rates. It also reduces the overall borrowing costs. Property mortgage loans typically offer larger loan amounts and longer repayment tenures, making monthly payments more manageable. Consolidating debts with a LAP can simplify finances by combining payments into one.
Also Read - Different Types of Mortgage Loans in India
Benefits of Loan Against Property
-
Loan Against Property has multiple benefits, but here are some you must know about:
- Interest Rate: Since it’s a secured loan, it typically comes with lower interest rate compared to unsecured loans.
- Loan Amount: You can borrow a significant amount based on the value of your property. Which is suitable for funding major expenses like home renovations, business funding, or debt consolidation.
- Repayment Tenure: The loan comes with a flexible repayment tenure which can extend to over several years. This can help you reduce monthly payment burdens.
- Quick Processing: This loan generally has a quicker approval and disbursement process since the loan is secured against your property.
- Retained Ownership of Property: You can continue to use and occupy your property while repaying the loan, if you meet the repayment terms.
Is Loan Against Property the Best Option for Debt Consolidation
A Loan Against Property can be an excellent option for you to consolidate your debt, due to its relatively lower interest rates compared to unsecured loans. By using your property as collateral, Loan Against Property allows you to access a larger loan amount, helping you consolidate multiple debts into a single, more manageable EMIs. This reduces the stress of handling multiple payments and often results in lower monthly instalments. Additionally, the longer repayment tenure associated with LAP provides greater financial flexibility, making it an ideal choice for you if you are looking to simplify your debt while retaining ownership of your property.
To Conclude
One of the most effective ways to pay off your debt without any confusion is to consolidate your debt with the help of a loan against your property. With the several benefits, such as attractive interest rate, high loan amount, flexible repayment tenure, Loan Against Property may be an ideal choice. If you are planning to consolidate your multiple debts into one, check out Poonawalla Fincorp’s Loan Against Property, for competitive interest rate, minimal documentation, flexible EMIs, high-loan-to-value and more. So, wait no more. Apply now!
Also Read - How to Secure a Loan Against Property?
Frequently Asked Questions
1. Can I get a loan for debt consolidation if my credit score is 700?
Yes, you can get a loan for consolidating your debt. However, having a score of 700 can limit your choices of lender as most lenders prefer a credit score of 750 and above. So, you must work on improving your credit score to get favourable terms.
2. Can I calculate my loan to value ratio?
Yes, you can calculate your Loan-to-value ratio (LTV) with Poonawalla Fincorp’s LTV calculator, just follow the steps mentioned below:
Step 1: Click on the ‘LTV Calculator’ on Poonawalla Fincorp’s official website.
Step 2: Select type of property.
Step 3: Enter the estimated value of the property. You need to input the estimated or appraised value of the property you plan to put as collateral.
Step 4: Check your eligible loan amount against the property value.
Remember that the LTV ratio is just one of the factors that lenders use to evaluate loan applications. Other factors such as credit scores and income eligibility also play important roles in the lending process.
3. What is the interest rate offered by Poonawalla Fincorp for Loan Against Property?
The interest rate offered by Poonawalla Fincorp for a Loan Against Property starts from 9.5%* p.a.