Achieve Financial Freedom with a Debt Consolidation Loan

Debt consolidation is the process of availing of a large, singular loan to combine all of one’s small loans into a single loan. The individual availing of a debt consolidation loan uses the loan funds to pay off their small debts. Debt consolidation loans are ideally used to combine unsecured loans, such as personal loans, education loans, credit card bills, etc., into a single loan, primarily to benefit from better loan terms and conditions, including lower interest rates. 

Debt consolidation offers several benefits. To start with, switching to lower interest rates allows borrowers to reduce the interest payout and the total cost of borrowing the loan. Further, individuals can opt for debt consolidation loan to be debt-free sooner. Switch to a lower interest rate loan but keep paying the same EMIs as you were paying before and you will become debt-free much before you imagined or had planned. Most importantly, debt consolidation makes life easier by making it imperative for credit users to remember only one due date. Doing so also reduces instances of missed EMIs and credit users attracting late penalties while also providing credit users with a fair chance to improve their credit scores.

To sum up, if availed of after deliberation and planning and repaid with dedication, debt consolidation can be highly beneficial. However, to consolidate debt, credit users need a financing tool that gives them access to a substantial amount, high enough to consolidate all of their debt into one. A loan against property can be the answer to all of one’s problems in this case. 

Individuals who own property — residential or commercial — can avail of a loan by pledging this property as collateral. Since the LTV ratio can go as high as 75%, loans against property, also known as property loans or mortgage loans, give borrowers access to a substantial amount, easily allowing them to consolidate all of their debt into one.   

To be able to avail of a property loan, one must meet all loans against property eligibility criteria. While the eligibility requirements for these loans vary from lender to lender, one is eligible for these loans only when one owns the property they plan to pledge as security and has all the property papers in their name. Further, the loan applicant must be a residing citizen of India, have a CIBIL score of at least 750 and must have a stable income from a job or business. 

If you meet these loans against property eligibility requirements and are wondering how to apply for a property loan, let us walk you through the application process. 

Loan Against Property: How to Apply

The process to apply for a loan against property is fairly simple. Here is what the process entails: 

  1. If you have already decided on the lender you wish to go with, go ahead and apply for a loan by filling out the application form on your selected lender’s website. You can apply for a loan against property both online and offline. If you are not sure about the lender, we suggest getting recommendations from acquaintances, scouring the internet for suggestions and reaching out to different lenders in the market to get clarity on what each is offering.
  2.  If the lender you have applied to decides to sanction you a loan, they will ask you to provide your address, identity, income and property documents. 
  3. They will now verify all the information and authenticate the documents provided by you. For this, lenders have a proper authentication team. The loan verification process generally involves two steps. During the first step, your lender will verify all the documents provided by you. During the second step, they will physically assess the property to gauge its current fair market value. 
  4. If you pass this two-step verification process, your lender will design a loan against a property sanction letter for you. You may negotiate with your lender for preferable loan terms. 
  5. Send a signed copy of the loan against the property sanction letter so that your lender can start working on the final loan agreement. Once they have drawn the final loan agreement, go to your lender’s office and sign the loan offer.
  6. Your lender will now disburse the loan funds and you can use the funds to consolidate debt. 

Until a few years ago, most credit users showed great reluctance in using property as collateral and availing of a loan against it. Thankfully, today, the majority of people understand that a property loan is as safe as any other loan option. However, planning is crucial here and therefore, the use of online tools, such as the loan against property EMI calculator and loan against property prepayment calculator, is recommended. 

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