Paying off many loans can be challenging because each one requires a different monthly payment due on a different day. Here, debt consolidation—the process of consolidating all of your debts into one loan—is the simplest path to hassle-free repayment.
Debt can be divided into two categories: secured and unsecured. Unsecured loans have high interest rates and strict qualifying requirements. Secured loans, such as loans against property, offer a bigger sum and are subject to more forgiving eligibility requirements.You can use Loan Against Property to consolidate your debt, combine all of your outstanding loans into one, and repay it conveniently.
This will help in ensuring financial stability by reducing interest expenses. A debt consolidation loan also removes the hassle of repaying multiple loans at a time. For example, you can apply for a new loan by mortgaging property and use the amount to pay off all your credit card bills, personal loans, and other existing liabilities. A loan against property is the best option for debt consolidation when the current obligations are large.
The incredible growth of the Indian banking and financial services sector in recent years has not only made finance more accessible but has also brought a wide range of financial products and services for customers to choose from. As the market matures with each passing day, consumers are getting the added benefit of rationalizing and planning credit sources and products to optimize the cost of portfolio lending.
One such innovative debt consolidation strategy is torationalize expensive and unsecured debt sources such as Personal loans or Credit Card outstanding with secured debt which is often available at much lesser interest cost.
Thus, one can take a Loan Against Property (LAP) covering one’s outstanding portfolio debt, allowing the individual to close costly unsecured loans such as personal loans or credit card dues. It helps in reducing the overall interest and outstanding debt in a single step and such strategies are increasingly being sought by both individuals and businesses.
What is Debt Consolidation?
Debt consolidation is a simple process where you take out a loan to pay off several existing debts. This can help you close multiple debts such as credit card bills, thus merging them into a single loan. It removes the inconvenience of managing multiple loan accounts.
The main advantage of debt consolidation is that you have to deal with a single loan and remember a single payment date instead of multiple payment dates.
One of the best ways to consolidate loans is to opt for Loan Against Property. Whatdoes a loan against property mean?
Loan Against Property (LAP)
A Loan Against Property is a secured loan that uses your property as collateral. Since it uses security, lenders are more likely to approve this loan. You can get up to 60 percent of the value of your real estate asset as a loan against property from your lender.
An effective way out of this is to consolidate your existing debts into a single loan on the property. With a new loan, you can opt for lower interest rates, lower EMIs, and other favorable terms of your choice.
Benefits of Loan Against Property (LAP)
You Save Big on Interest Rates
One of the hardest aspects of multiple loans is paying multiple interest rates. It can also mean that you are paying large sums of money. A loan against property generally comes with a relatively low-interest rate. The important thing is that the rate is fixed, and you also have a stipulated period within which you can make the repayment.
Low Monthly Payments
With multiple payments and multiple creditors on the list, it’s not uncommon for you to lose track of your repayment due dates. In such a case, you will have to pay an additional fee for late payment. It is also likely to negatively affect your credit card score. Paying off multiple of these loans using a single payment derived from a property mortgage loan will reduce the hassle of keeping track of an exhaustive inventory.
Higher Loan Limit
The property held as a mortgage has a direct impact on the loan amount on the property. Depending on the present value of your property or land, you may be eligible for higher loan approval. This is essentially great if you have multiple high-rate loans to consolidate or pay off. Most of the lenders allow you to borrow an amount ranging from Rs 10 lakh to Rs 5 crore.
While a loan against property can help finance many debts, understand that it is not a magical way to get rid of debt. It helps keep your finances on track and if used irresponsibly, it can push you deeper into a debt trap. Hence, having sound and responsible financial habits is very important.
Long tenure
Look for lenders who are happy to offer flexible loan terms. The tenure can be of 20 years. However, it is always better to pay them off as soon as possible.
Best option to pay off all your debts?
Loan Against Property offers a high loan limit which may be more than enough to pay off all your existing debts. Lenders can approve up to 60% of the market value of the property or land. If you have multiple loans that you cannot consolidate with other loan options, then Loan Against Property is the best option for you.
Conclusion
Debt consolidation can help you pay off your debts systematically. One of the most effective means is to apply for a loan against property. This can help you get more time, money, and a lower interest rate, making loan payments easier.
