If you need money for funding your business or for personal reasons like medical treatment, marriage, etc. you can keep any of your commercial and residential property as collateral and take a loan from a bank against it. The property can be a building, office, flat, shop, and whatnot. A lot of people aren’t properly acquainted with this process and end up making a lot of mistakes. We have listed some major mistakes below that you must be careful about while taking a LAP:
Not comparing rates of interest
When you approach various lenders for LAP, it’s important to do enough research on your part. You should compare the various rates given by various lenders and choose the one that’s most affordable for you. This would keep your equated monthly installments low. Most people are in a hurry to take the loan and hence don’t bother to compare and calculate. As a result, they end up paying a lot extra in the long run.
Not reading the agreement properly
In a hurry to finalise the agreement, people often forget to read the payment terms in detail. Banks and other loan providers take advantage of this and charge a high amount for prepayment. Hence, one should be responsible enough to take home and go through every clause of the agreement. In case of any doubt, one must consult it with a professional or your loan provider.
Choosing a long tenure
The tenure of a loan against property is important. The longer the tenure, the more is your disadvantage. Don’t go for a longer tenure because your provider is offering one. If you can repay the loan within a short period, do so. A shorter period means lesser interest rates.
Not Calculating the EMI
Most importantly, you must pay your monthly EMIS from time to time. Calculate the monthly payment that you have to pay back and then decide the amount of loan that you can afford to borrow from the bank. Never choose a higher loan amount simply because your property qualifies for it unless you can pay a healthy EMI monthly.
If you are going through some crisis, taking a loan against property is a great way to meet your financial needs. Several Singapore small business loan providers offer LAP at affordable rates. You must utilise their offers wisely and make the most out of it.