There are times when you need to apply for a loan. However, if you have multiple debts, managing them and paying off the EMIs on the due date can become frustrating. It becomes difficult to track all the interest rates and EMIs of every loan or credit.
An alternative method is debt consolidation.
What is Debt Consolidation?
Debt consolidation is a simple process where you take a loan to pay off multiple existing loans. It can help you close many debts, such as credit card bills, thus merging them into a single loan. It removes the inconvenience of managing multiple debt accounts.
The main benefit of debt consolidation is that you will have to deal with a single loan rather than multiple payoff dates.
One of the best ways to consolidate debts is opting for a loan against property. But what is a loan against property anyway?
Loan Against Property
A loan against property is a secured loan that utilises your property as collateral. Since it uses security, lenders are keener to sanction a loan. You can get up to 60 per cent of your property worth as a loan against property from your lender.
However, can you use a loan against property for debt consolidation?
Loan Against Property As A Means Of Debt Consolidation
If you have various types of debts, it can create panic.
An effective way to get out of it is by consolidating your existing debts into a single loan against property. With the new loan, you can opt for a lesser interest rate, lesser EMIs, and other favourable conditions of your choice.
Benefits of Opting Loan Against Property For Debt Consolidation
Opt For a Lesser Interest
While you repay your debts, you are also paying a substantial amount as interest. With multiple debts to clear, it becomes difficult to track the interest rates. However, they can silently chip away all of your savings.
Loan against property offers significantly lesser interest rates.
Longer Tenure and Lesser EMIs
Another benefit of the loan against property is its tenure. You can reduce monthly EMIs via loan consolidation and opting for a longer-term.
Seek lenders that are happy to provide flexible loan terms. The tenure can go up to 20 years. However, it is better to pay them off as soon as possible.
Enough Funds to Pay Off All Debts
A loan against property offers a higher loan limit that might be more than enough to pay off all your existing debts. Lenders can sanction 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, a loan against property is the best option for you.
Loan Against Property: Documents Required
loan against property documents required may vary from lender to lender when you are going to apply for LAP loan.
However, you need a few documents to apply for a loan against property.
They are as follows:
- Filled-up loan application form with sign and photo
- Age proof document
- Residence proof document
- Latest educational qualifications
- Income proof document
- Taxation documents
- Processing fees
- Photocopies of property documents
- Bank statements
Conclusion
Loan consolidation can help you clear off your debts systematically. The most effective means is applying for a loan against property. It can help you get more time, funds, and a lesser interest rate, thus making loan payments easy.
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