The biggest challenge for a borrower would be to choose a finance option that does not hurt his/her repayment phase and has lower interest rates. If you have an asset that you can leverage to avail loans from established lenders, you can have a considerable advantage over your finances. Here’s where LAP comes handy.

LAP – Important facts

In Loan against property you can pledge your property to the bank/NBFC to avail of loans. Here are some facts about LAP:

• Ownership:

Despite pledging your property to the lender, you are still entitled to the ownership of your asset. You can sell the property to settle the loans and also could lease out your building during the tenure. In some cases, banks/NBFCs also provide mortgage loans to those properties which are under home loans. Such an instance is possible if the market value of your property increases.

• Floating interest rates: 

Compared to home loans, where the interest rates are fixed, LAPs have floating interest rates, which can depend on the lender. Hence you need to check with your lending institution on this during application. 

• Associated charges:

There will be a small percentage of the loan amount debited as the processing charges for the loan. Most of the lenders do not levy penalty charges for pre-closure of the loans. 

Conclusion:

The documentation and the processing time for such loans are usually hassle-free. You can use a mortgage loan EMI calculator to compare the lenders and choose the best financial partner for yourself.

Must Read: Important Factors That Affect Your Property Loan Eligibility