17 FEBRUARY, 2022

A loan against property is probably one of the best ways to leverage your asset and fund your varied needs. It has attractive interest rates and flexible repayment tenure to help you arrange money in a short time. However, it involves a huge amount of money, and you should be careful while availing one. To help you avail a loan against property without any hassle, here are some do’s and don’ts you must know about.



  • Check your eligibility

You must ensure that you fulfill the loan against property eligibility before applying. Lenders are very stringent while processing the loan application. If you do not fulfill the eligibility, they can reject your application, which can affect your credit score and future chances of availing loans. You can check the loan against property eligibility from the lender’s website.


  • Research well

Availing a loan against property is a long-term commitment, and you must ensure that you choose the lender carefully. Before applying, you must do adequate research about the loan terms, interest rates, tenure, etc. Also, you must not choose a lender based on all the aspects of the loan and not just their interest rates. Choosing a lender in haste can cost you heavily for the entire tenure.


  • Read fine prints

A loan is a debt that can go up to a decade. Therefore, ensure that you are well acquainted with all the aspects of the loan. While reading the agreement, ensure that you know about any hidden charges, additional costs, or conditions that can impact you in the future. You must read the fine prints carefully before you sign below the dotted lines of the loan agreement.



  • Borrow more than you can repay

A loan against property involves a significant amount. While your property could be worth a lot of money, you must not borrow the entire property’s value as a loan. For example, your property could be worth Rs 1 crore. But if you need only Rs 20 lakh, do not borrow more than that. You must evaluate your needs, risk, and finances before deciding the loan amount. You must also check your affordability with a loan against property EMI calculator before applying.


  • Opt for a long tenure

If you can afford it, you must opt for a short tenure to minimize your cost of borrowing. A long tenure can lower your EMI, but it can increase your interest outgo and thus your total repayment amount. With a short tenure, you can repay the loan faster.


  • Skip payments

You must pay all the EMIs on time. Never skip any EMI payment as it can lead to penal charges and late fees. Moreover, when you take a loan against property, your asset is at stake. You could lose your property if you miss too many EMIs.


A loan against property can be used for a variety of different needs. However, while availing a loan against property, you must ensure to submit the necessary documents and check eligibility and affordability. Also, check if you can claim any tax benefits.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.