Debt is a vital aspect of your financial profile, which can work either in your favour or not. By handling credit responsibly, you can steer clear of any debt traps and in fact, achieve your goals faster. While borrowing credit can significantly inflate your spending abilities, you should never lose sight of the fact that you’re also required to repay this amount. However, if you are already struggling with debt, consider the impact of time on your dues.
Most forms of debt incur interest over time and you may be stuck in a vicious cycle of repayment if your finances are mismanaged. At this stage, your best option is to opt for a loan against property for debt consolidation to silence all ticking deadlines.
However, while you consider your suffering CIBIL score that bears the brunt of your outstanding debt, you may wonder what will happen to it when you borrow against your property. Read on to find the answers.
How Does Debt Consolidation Via A Loan Against Property Affect Cibil Score?
When you apply for a loan against property, lenders issue a hard inquiry to look into your credit history. This can result in a slight drop in your credit score. Your score then drops again when the credit is sanctioned.
However, repaying all your outstanding dues helps your CIBIL score rise again, and this usually increases more than the initial drop. From here on, maintaining the CIBIL score and working towards its increase is your responsibility. All you would need to do to achieve this is make timely repayments and avoid late EMIs, bounces or other penalties.
Now that you know how your CIBIL score will transition and how to control it, here is how a loan against property can be beneficial and when you must borrow it when you have substantial debt.
Is It A Good Idea To Consolidate Debt Using A Loan Against Property?
It is a wise idea to consolidate your existing using a loan against property simply because it helps you a comfortably clear out debt that is growing in interest. The high loan amount is sure to be enough to pay off outstanding dues, and with the low-interest rate on this secured loan and its long tenor, you can enjoy affordable repayment. Furthermore, it is easy to avail of a loan against property in India as some lenders have a relaxed and easy to meet loan against property eligibility criteria.
When Is The Right Time To Opt For A Loan Against Property For Debt Consolidation?
In order to decide upon the right time, you need to understand your financial profile. Generally, financial advisors recommend debt consolidation in two major instances. The first is when you have high-interest forms of credit. This can include missed credit card bills, or an outstanding personal loan. These forms of debt have a high-interest penalty and clearing them off immediately is vital to your financial wellbeing.
The second instance is when you have multiple debts and their repayment is hard to manage with different deadlines for multiple EMIs. Use a loan against property sanction to clear off all these debts and instead pay just one EMI consistently. You need a Credit Score value for approval of debt consolidation loan. If your CIBIL score is low then you must need to know how to increase CIBIL score.
As you can tell, a loan against property is especially effective at helping you get rid of multiple forms of debt in one fell swoop. However, you need to be aware of the added responsibility that comes with taking a loan of this nature because of the pledged collateral. You must consider changing your spending habits to avoid landing in the same situation again.
Ease repayment by opting for a loan against property from a lender that caters to affordability. Loan Against Property does just that and more by offering additional value-added loan against property features. To consolidate your debt affordably, you can get a sanction up to Rs.3.5 crore at a competitive interest rate.
Further, the loan against property documents required here are minimal. This combined with a flexible loan against property tenor translates to lower EMIs and easy repayment. This loan also has a quick and easy application process and you can enjoy customized deals when you check your pre-approved offer.