Debt Consolidation Loan: How to Get Out of Debt

Debt consolidation is the process of repaying several loan obligations with a single fresh loan. Individuals who have borrowed multiple credits and are finding difficulty to repay several EMIs together can opt for this facility. This approach tends to establish convenient monthly charges to be paid over a predetermined duration. 

As a result, borrowers will be able to pay less interest and come out of the debt trap sooner. By borrowing a debt consolidation loan against property, an individual can enjoy reasonable interest rates and reduce the overall interest outflow.  

Advantages of debt consolidation loan

Mentioned below are the beneficial features that have popularised debt consolidation loans among borrowers in the credit market: 

• Easy repayment of the loan 

If the individuals’ rate of interest for a debt consolidation loan is lesser than debt, they can make extra payments from the money they save every month. This will not only help them repay loans faster, but also save more money in interest down the line. Borrowers should remember that debt consolidation results in extended loan terms, so they have to pay off their debt earlier to avoid monetary burden.

• Finances are streamlined

Combining multiple loans into a single loan can reduce the burden of too many payments and interest rates. Besides, it helps in improving the credit history and credit score of an individual by lessening the chances of missing EMIs or making late payments. Thus, if a person is willing to lead a debt-free lifestyle, going for debt consolidation can be sensible since it reduces the burden of too many payments from his/her shoulders.

• Reduced interest rates

Another benefit people can get by opting for debt consolidation loans is the reduction of interest rates. Merging several undue payments into a single loan helps reduce the total number of payments and rates of interest which can cause a financial strain upon borrowers. Besides, combining multiple loans into one loan with a long-term tenor can help save funds for the future. In addition, debt consolidation allows an individual to make payments timely thereby improving his/her credit score.

• Flexible tenor

Borrowers can enjoy a flexible tenor by opting for a debt consolidation scheme in order to repay the borrowed loan amounts. In general, the tenor for a debt consolidation loan stands between 5 years and 15 years. People can choose any interval between this range as per their repaying capacity by negotiating with the lending institution.  

• Fast processing and approval

As the borrowers submit the necessary documents to their respective lenders, the latter will verify their application alongside the supporting documents. If the lenders find everything regarding the application is genuine, they will approve the loan request within a week or two. 

When it comes to debt consolidation, one of the top approaches to do so is to opt for a loan against property. 

How to apply for a loan against property?

Following is the simple step-by-step procedure by which a person can apply for a loan against property:

Step 1: Go to the official website of a preferred lender  

Step 2: Navigate to the ‘Loans’ section and click on the ‘Loan against property’ option

Step 3: Check the eligibility criteria and select ‘Confirm’

Step 4: After this, click on the ‘online application form’ for a mortgage loan

Step 5: Fill out their respective application forms with personal and property details.  

Step 6: Enter their income details and financial status to access the loan offer

Step 7: Double-check the application form as well as supporting documents 

Step 8: Click on ‘Submit’ and wait for the documents verification

Step 9: After verification is successful, the borrower will get the letter of sanction from the lender

Step 10: Borrowers will finally get the loan amount credited to their bank accounts 

Before applying for a loan against property online, individuals need to fulfil the eligibility criteria without fail.    

Loan against property eligibility criteria

Following are the eligibility criteria that every individual should meet while applying for a mortgage loan: 

• Applicants should have Indian citizenship
• Age of self-employed applicants must be between 25 years and 70 years 
• Age of salaried applicants should be between 28 years and 58 years 
• Self-employed borrowers must have a stable income as well as a business experience of at least 5 years. 
• Salaried borrowers should have at least 5 years of working experience at  MNCs,  private, or public sector companies 

After fulfilling the aforesaid eligibility parameters, borrowers must keep the necessary documents handy.   

Documents required for loan against property

Here is the list of documents that both salaried and self-employed borrowers must furnish in order to avail loan against property:

Salaried borrowers 

• Identity proof (PAN card, Aadhaar card, driver’s licence)
• Address proof (Aadhaar card, telephone bill, voter ID card)
• Income proof (current salary slips of last 3 months, bank account statements for last 3 months) 
• Income Tax Returns (ITR)
• Copy of Form 16
• Property papers 

Self-employed borrowers

• Proof of identity (PAN card, passport, voter ID card, Aadhaar card)
• Proof of address proof (Aadhaar card, ration card, energy bill, etc.)
• Income proof (bank account statements for the last 6 months, profit and loss account, and balance sheet)
• Income Tax Returns (ITR)
• Business proof documents (certificate of incorporation, commencement certificate, partnership deed, etc.)
• Property papers

Common features of loan against property

Mentioned below are the common features that have made property loan an ideal credit option for potential borrowers:

• Easy documentation
• Ability to pre-close
• Attractive interest rates
• No end-use restrictions
• Flexibility of loan repayment  
• Longer tenor
• Higher Loan to Value (LTV)

There are many reputed lenders that provide personalised pre-approved credit offers to their prevailing borrowing persons. Such offers are accessible on various secured financial products such as housing loans, mortgage loans, etc. and unsecured financial products like personal loans, business loans, etc. Prevailing borrowers can enter their name and contact details to verify the pre-approved offers.  

In a nutshell, individuals struggling to repay a number of EMIs of multiple loans can opt for the debt consolidation loan facility. Availing this facility with the help of a property loan can help borrowers convert several credits into a single loan and repay the amount without hassle.