loan against property

All You Should Know About Loan Against Property

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With a loan against property, you can get funds for your emergencies by placing your property as collateral. Before you opt for a loan against property, these are some points that you should know about it.

5 things about Loan Against Property

  1. Know the value of your property
    Before you use your property as collateral, make sure to know the value of your property, so that you can get a better deal on your loan. Some things to know about your property are the age, the locality it is situated in, the reputation of the builder, size, and amenities offered. 
  1. Check various lenders:
    Different lenders have different terms and conditions for the loan against property. So, it is important to check various lenders that are available, and the interest rate, the loan amount they are offering you. Even the application process for LAP is smooth and simple.
  1. Eligibility criteria:
    For Loan Against Property, the eligibility criteria are the same as that of a personal loan. However, more focus is done on the property you are using as security.
  2. Multipurpose Loan:
    There is no fixed purpose for which Loan Against property can be used, so this is a multipurpose loan which can be used for healthcare, business, and many more.

  3. Loan available for all:
    The Loan against property is available for both salaried as well as business professionals. 

Loan Against Property is a great financial tool for your emergencies. So, if you are interested in opting for it, the above points will help you get the much-needed information about LAP. Make sure you choose a lender who fulfils your criteria and then chooses wisely. 

Must Read: How to Get a loan against property from Fullerton India?

Benefits of Loan Against Property

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Loan against property is a convenient way to get a loan at lower interest rates than personal loans. Unlike the personal loan, where no collateral is required, in LAP the loan is taken against property i.e. you keep your property as security in case you are not able to pay off the loan in the allotted time period. You can apply for LAP here: https://www.fullertonindia.com/loan-against-property.aspx

Benefits of Loan Against Property

If you have some property in your name, which you can use as security, a loan against property is one of the options. Some of the benefits of LAP is: 

  1. A loan against property is a secured loan. 
  2. As the property is kept as security, the interest rate is lower than a personal loan. 
  3. The tenure for repayment of the loan amount is more than in any other loan. You can also extend the time line up to 15 years. 
  4. The EMI loan Against property is lower than other loan types.

Disadvantages of Loan Against Property

While loan against property is a great way to finance your expenses, it comes with its set of disadvantages which are:

  1. The amount that one can borrow is directly proportional to the property kept as collateral. 
  2. The income laws are strict in the case of LAP as that is the only eligibility norm. 
  3. The evaluation of the property is done by the lenders themselves, and thus the value is lower than the actual market value. 

So, like any other loan, LAP also comes with its set of pros and cons. It is important that before you make any decision, make sure to evaluate both, and then decide accordingly. You can use the mortgage loan calculator to get a better idea. 

Must Read: 6 Common myths about loan against property you need to stop believing

Need Funds for your Startup? Explore the Loan Against Property Option

The funding gap is a problem faced by most start-ups as there is a wide chasm between the number of funds needed and the number of funds available for such companies. While the fund needed is very high, funds are not so easily available. Such lack of funds often demotivate the owners of the company as they are unable to execute their ideas and visions. However, such a problem of the funding gap can be solved by using a loan against property or property loans.

How can a loan against property help?

A loan against property allows the start-up founders to obtain a loan against an asset that is lying idle. Since loans are secured by the property, the banks are willing to give a higher amount of loans at lower rates as compared to personal loans. A high-value property and a respectable credit score can allow you to obtain such loans easily.

Loan against property calculator also is less troublesome for the borrower as interest rates are much lower as compared to the personal loans. This allows for longer tenure loans as well as a reduced financial burden on the entrepreneur. The entrepreneur also has minimal restrictions regarding the usage of such money. A bank might restrict the fund usage in case of a car loan or home loan, however the same is not an issue in case of loan against property.

A loan against property can prove to be the white knight for a beleaguered company and startup. Apart from the lower interest rates, it allows the owner to concentrate on their business and steering it through rough waters.

Additional Read: Here’s How You Can Avail Tax Benefit On Loan Against Property?

FAQs

Do Indian banks/NBFC give a loan against property for doctors?

How does loan against property work?

Know Reasons why to Secure your Loan Against Property

A loan against property is a secured loan that can be obtained by any individual or corporation by putting up their property as collateral. A property loan may be obtained for a variety of purposes including personal expenditure, business purposes and even to pay off other loans. (checkout your LAP documents here)

As compared to other modes of loan, loan against property holds certain distinct advantages that make it favorable. 

  • LAP is easier to obtain:

A property loan is generally easier to obtain as compared to a personal loan, business loan, or education loan. Since LAP involves collateral, the financial institution is more relaxed with regards to the recovery of such loans granted. Loan against property documents required is quite less as compared to personal or other loans. 

  • The borrower will get the advantage of lower interest rates:

Since the loans are secured against a property and the loan granted is less than the value of the property, financial institutions are more likely to give you lower interest rates. This is in stark comparison to education loans or personal loans which have high-interest rates. 

  • Flexible tenures: 

A property loan may be granted for upto 20 years by certain lenders. This allows the borrower to pay a lower EMI initially and in case of the betterment of financial condition can pay off the loan. The longer tenure though is very useful in the initial years of the loan. 

A property loan might be a solution to stop short term problems or take advantage of opportunities. The above benefits make it more attractive and increase its demand amongst the consumers.

Must Read: What are Difference between Home Loan vs. Loan against Property

Ten Reasons Why You Should Take A Loan Against Property to Pay Off Loans

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There could be instances when one needs a large amount urgently. Funds could be needed to deal with business losses or for business expansion or an impending wedding or for foreign education. If one has property available, rather than selling the property to arrange for the funds, one can take a property loan for the convenience. 

Here are ten reasons why a property loan or a loan against property is useful:

  • A high LTV: 

A loan against property is generally sanctioned up to 90% of the property value which allows for a higher loan to be obtained. 

  • Lower rate of interests:

 The interest rate of a loan against property is lower than a personal or unsecured loan. Such a loan against EMI calculator will easily show the benefit of the same. 

  • Secured Loan:

Since the loan is secured against property, financial institutions have easier norms. 

  • Possibility for higher tenure: 

The security of the property allows financial institutions to provide a longer tenure for repayment thus easing immediate financial pressure on the borrower. 

  • Prepayment is allowed: 

Loan against property allows for pre-payment and thus the borrower can prepay as and when the financial situation strengthens. 

  • Single loan instead of multiple loans: 

Since a loan against the property can be obtained for a higher amount, it can be used as a mode to repay other loans. This will result in a single EMI instead of multiple EMI’s. 

  • Easy approval as opposed to personal loans: 

Property loans are generally easily approved as compared to personal loans due to the security of the property. 

  • Faster disbursement: 

The easy approval results in faster disbursement allowing the user to make use of such an amount and take advantage. 

  • Top-up facilities can be availed: 

Users can choose to borrow until a certain percentage of the property and keep the option of top-up open for the remaining portion. 

  • Tax benefits in certain cases:

Interest and charges for such loans can be claimed in Income Tax if used for business purposes and can also be claimed against House Property if loan obtained for such purpose. 

Selling a property could take time. It may also be a convoluted process. Therefore it makes sense to acquire a property loan and arrange funds quickly.

Additional Read: Here’s how you can avail tax benefit on loan against property

Why Loan against Property is a Popular form of Financing in India?

LAPs are extremely easy to procure, considering the secure nature of the credit line. Moreover, as they aren’t particularly credit score dependent, loan rejection isn’t a restrictive issue, provided every property document is in place. 

In the subsequent sections, we shall take a closer look at the efficacy of LAPs when financial independence is concerned and why the same is the best option to get your hands on a sizable stash of cash.

  1. Decent LTV

Based on the property valuation trends in the bigger cities like Delhi, Mumbai, and Gurgaon, you are expected to get a decent LTV (Loan to Value ratio) or a bigger sanction on the property value for the loan against property, provided the lender has faith in your repayment capabilities. In most cases, you can even get an amount that is worth 60 percent of the existing property value.

  1. Competitive Interest Rates

A LAP needs to be repaid like any other loan and therefore it is advisable to consider getting a loan against property interest rate to be financially independent, both in the long and short run. 

  1. Flexible Repayment Tenure

If and when the LAP serves as a business loan, you can add a sense of flexibility to the repayment scheme by opting for a customized tenure. Then again, you need to be well-aware of your financial stead before proceeding with the tenure adjustment. 

In India, LAP is an extremely popular form of financing, provided you require sizable funds with minimal sanctioning dependencies.

Must Read: Never Refinance your Mortgage Loan Without Asking These Questions

Why Loan against Property is the Best Financial Decision during Emergencies?

Mortgage loans are extremely resourceful entities, provided you require quick financial support without exorbitant interest rates. Amid the diverse set of mortgage loans, a LAP is probably the most rewarding option to rely on, based on the usable amount, speed of approval, and competitive interest rates.

Here are some of the reasons why loan against property (https://www.fullertonindia.com/loan-against-property.aspx) is a prudent choice for funding businesses or attending to emergencies:

  • Sizable valuation

LAPs allow you to get a decent line of credit as credible lenders offer a true assessment of the concerned establishment. While the business and personal loans have funding limitations, you can procure a sizable amount as LAP, amounting to almost 3.5cr for self-employed individuals.

  • Flexible Tenure

LAPs, if and when offered by credible lenders, allow you to be flexible with the tenure. Most importantly, you can use the same as a long-tenure mortgage loan provided you are willing to repay the same, slowly.

  • Supports a wide range of properties

If you have made up your mind regarding a LAP, you can use a wide range of establishments for procuring a decent line of credit. Be it a commercial or a residential establishment, loans against properties are compatible with diverse assets. 

  • Affordable

LAPs are extremely affordable considered the secured nature of the same. This means that the loan against property interest rate is often lower than a standard personal or business loan. Moreover, this attribute ensures that you can extend the tenure without having to worry about the accruing interest. 

These features qualify LAP as the best form of financial support, especially during emergencies. 

Must Read: 5 Types Of Mortgage Loans: Which One Is Best For You?

3 Reasons To Choose Loan Against Property (LAP) During Times Of Emergency

Have a sudden financial crisis that needs to be dealt with immediately? Loan against property (LAP) can be the right option for you. Let’s have a look at a few benefits of choosing LAP in case of emergencies.

Financial issues are part and parcel of life and can happen with anyone. However, delaying your pre-planned idea due to lack of money is not a wise call, and you may even face the consequences in the long term. Hence, in such situations, you must consider taking a loan.

If you require a large amount with a long repayment period, a loan against property can be an ideal option. 

LAP (Loan against Property)

In case of LAP, you need to mortgage your commercial or residential assets to get the loan amount. Thanks to the multiple added advantages, the demand for LAP is growing like never before.  

Here are three key reasons for choosing a LAP as the primary loan option:

  • LAP is a secured form of a loan and poses a significantly lower risk for the lender. Therefore, the loan against property interest rate is lower than that of any other loan. 
  • Generally, you can sanction a large amount of money through LAP. As a result, if you are planning to expand your existing business or provide quality education to your children, LAP can do the job for you. On the other hand, you can extend the repayment period for up to 20 years. As a result, you will have enough time to pay back the loan amount. 
  • Thanks to the longer repayment period, the EMI for LAP is relatively lower than its counterparts.

Nonetheless, it is strongly recommended to hire a reliable lender to get the best possible result.

Must Read: 6 Things to Notice before Taking a Loan against Property for Education

Loan Against Property Without Income Proof: Is it Possible?

A loan against property or LAP is a loan taken against a residential or commercial property. The property value is assessed before the loan is sanctioned, and the percentage of the property value is given as a loan. One can check their loan against property eligibility online as different lenders have different terms. Make sure you do your research and choose a lender that you are comfortable with.

You must disclose what you are going to do with the money and how you plan to return it as a part of repayment. The loan amount could be anywhere from 40-60% of the property. This is based on the new assessment done and is 40-60% of the current market value. 

Now the tricky part

Getting a loan is difficult, as they will ask you for your income proof even if you are offering collateral. This can be tricky as the lenders need assurance about how you are planning to repay the loan.

  • You can talk to the relationship manager at the bank and ask if there is any other reassurance that you can give to procure the loan. You can offer collateral or tell them how you plan to repay the said loan in the future.
  • Another way to do this is to get a co-applicant. The co-applicant must have a good credit record and a valid proof of income so that the lender can see the EMIs coming in soon after the loan’s approval. 

Must Read: What Is The Difference Between Home Loan Vs Loan Against Property?

Important Facts To Know About Property Loans

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

A Comprehensive Overview Of Essentials of Loan Against Property

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In this day and age, a host of loans are provided by banks so that we can use the cash for various purposes. It can be a vehicle, a house, or a loan for any business venture etc. A relatively popular loan is the Loan Against Property which is essentially a mortgage. This type of loan is popular amongst borrowers as it allows you a large sum of money for any need or challenge that you might incur. Another attractive part of this loan is that it has easy documentation/loan against property eligibility and very flexible repayments. Add to that speedy approvals, and one can surely guess why many apply for a loan against property.

In the loan, the property is put up as a collateral or security. The state defines a loan against property as only a transfer of interest and not the ownership. It means that the borrower remains the owner of the property and the transfer of ownership will happen if the borrower defaults on the loan repayments.

The loan against property eligibility includes the proof of residence, income statement, latest bank statement. If you are an employee, you need the last six months’ salary slips. If you are a business owner, you might need to show at least three years of income before your loan is approved.

The key benefits of having a loan against property:

  1. Lower interest rates
  2. Good while availing more massive amounts
  3. Low EMI due to longer tenure
  4. The Flexibility of how you use your loan

Must Read: Advantages of Loan Against Property to Raise Funds

Rules To Follow While Taking A Loan Against Property

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If you are looking for a lump sum amount to finance your business, look no further than a loan against property. A property loan is a good idea to finance any requirements for a lump sum amount of money. The lender will consider your property as security and give a loan at an affordable interest rate. To get a loan against property, there are few rules you should abide by.

Rules to follow while taking a loan against property –

  1. Making repayments timely

Whenever borrowers do not make timely payment, lenders usually levy a penalty charge. This penalty charge increases the cost of borrowing for the borrower. In addition to that, many late EMI payments can also lead to a reduction in the credibility score. So, all borrowers should ensure that repayments are made in time and according to the interest rate decided. 

2. Read terms and conditions carefully.

There is a considerable amount of documentation required when availing a loan. It might all look not very interesting, but it makes sense to read all of it thoroughly to avoid any surprises in future.

It is also advisable to deal with a reliable lender and a credible agent not to experience any surprises regarding charges and repayment in future. 

3. Borrow based on your financial situation

As a rule, no Equated Monthly Instalments (EMI) must be more than 65% of your net income. Therefore, if you are considering applying for a more significant amount for a loan, your repayment capability as per your net income should match it.

These were a few rules borrowers should follow if they are looking to get a property loan. We hope you undertake responsible borrowing and repayment practices while availing a loan.

Must Read: All you Need to Know about Loan Against Property Overdraft Facility

 

Benefits of a Loan Against Property

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The loan against property is a type of loan that owners of the property can avail for a large sum of money and easy low-interest repayments over 15 years usually. The loan against property is not as scrutinising as some other loans. Thus the easy approval loan against property eligibility, large sum and a more extended period of the repayments makes this a very popular loan in the world of real estate.

1. Monthly Instalments

The monthly instalments are divided in such a way that you will be comfortable paying them for years and will be deducted directly from your income. It also means that you can claim this while you are filing your tax return. You end up saving a percentage of your money by not giving it to the government. A deduction of up to 2 lakhs can be claimed every year.

2. Interest Rate

It does not matter whether your interest rate is high or low on your loan against the property; this again can be claimed in the income tax returns. Thus you will be able to save even more money.

3. Usage

It does not matter how you choose to spend the money even though this is a secured loan. This flexibility means that the loan can be used for multiple things. Whether it be to finance your business, go on a vacation or use it to buy another asset.

4. Property Type

Whether you have a residential or commercial property, it does not matter as a Loan Against Property can be acquired for both of them.

Must Read: Should You Use a Loan Against Property for Home Improvement?

Reasons Behind Rejection Of Loan Against Property Application

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Applying for a loan against property is the easiest way to get funds during financial emergencies. It is easy to meet the eligibility criteria with a little preparation. But it entirely depends on the lender to approve or reject your application. 

But sometimes it happens that a mistake cause rejection of your loan against property application. Here’s a list of 5 reasons that might lead to rejection of your loan against property application-

  1. Age Of The Property

It is one of the essential factors for the approval of your loan. The current condition of the property determines the loan tenure. If your property is new, then the loan tenure will be longer. The property’s value also determines eligibility. You can quickly check the eligibility using a loan against property calculator.

  1. Approval By Government

It is necessary to have all the documents and the government’s approval on the property. If you have lost some approval documents, then you can apply for them again. 

  1. Deviations From The Approved Property

There should not be any discrepancies or violations from the approved property. The lender might reject your application if there is even the slightest deviation.

  1. Disputes On The Property

If there are any co-owners of the property, then the application form must be signed by them all. There should not be any dispute regarding the property.

  1. Income Tax Returns

It is necessary to have filed the income tax returns for three years if you are self-employed. 

Conclusion:

Make sure to meet the minimum credit score and have all the documents in-hand before applying for a loan against property. With some research and planning, you can quickly get your loan approved.

Additional Read: Factors That Affect Tenure of Loan Against Property

Quick Guide for Loan Against Property

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Having an asset or property can be advantageous in many ways. In an economic context, if you own a property, you can leverage the same to apply for a loan against property. The good news is that you will still be an owner of your property while availing the loan. Hence the loan against property is considered one of the most popular secured loan types in the market.

Benefits of Loan Against Property:

  • LAPs have lower interest rates than unsecured loans like personal loans.
  • The loan tenure can go upto 15 years in comparison with the limited tenure of personal loans.
  • Since the loan type is secured, the lenders have made the documentation process relatively flexible and simple for your benefit

Loan Against Property Eligibility:

As a borrower, you can leverage the loan against property EMI calculator to know the details of the loan. However, a lending institution would assess the following factors to qualify you for a LAP:

  • Must be of 21 years of age with the age limit upto 60 years for the salaried and 70 years for the self-employed
  • The value of the property
  • The credit score of the borrower
  • The income capabilities of the borrower. The lenders do expect minimum income sources to qualify for LAP

Conclusion:

You can check with your lender on the documents that need to be submitted to avail LAP which would be typically KYC, property, income proof documents. One needs to check with multiple lenders and decide on the best financial partner who can provide better benefits. 

Additional Read: How to calculate your Eligibility for a Loan Against Property?

Handbook on Loan Against Property

Loan against property is a credit tool that helps you leverage your property for funds. By collaborating with a reliable lender, applicants are assured of a high loan to value on loan against property.

Let’s delve into this further.

A loan against property can address your fund requirements from funding your child’s education to taking that dream business onboard. Although personal loans are a prominent option, here is a reason why you should choose a loan against property.

  • Affordable interest rates
  • No prepayment charges
  • Easily accessible
  • Flexible repayment tenure
  • Affordable EMIs
  • Minimal documentation

Lenders like Fullerton India offer its customers flexible repayment processes with affordable interest rates. Besides providing a high LTV, the overall process involves minimal documentation and hence is hassle-free. Using a loan against property calculator, applicants can decide a repayment scheme that best suits their repayment capability and financial capacity.

Hence the question arises: Which property qualifies as collateral for a loan against property?

You can use the following as collateral:

  • A self-occupied house
  • A land that you own

The property should be free from any legal complications, and there should be clarity on the title deed. Lenders sanction the loan amount after considering the market value, locality and several other factors.

Final thoughts

Loan against property is amongst the most accessible loans that one can avail. With the right lender, applicants can receive a high loan to value on the collateral pledged at affordable interest rates.

Must Read: 7 Factors That Affect Loan Against Property Eligibility Criteria

Why Should You Opt For Loan Against Property?

Most financial experts suggest loan against property as a better alternative to a personal loan. Let’s have a look at some of the reasons why you should consider this financial tool when you require funds. 

Why should you opt for Loan Against Property?

As the name suggests, loan against property (LAP) is a secured loan wherein the financial institute or lender lends capital to the applicant and keeps their property as collateral till the repayment of the loan. After the applicant repays the loan, the property documents are returned to them. There are some significant LAP types – loan against industrial property, loan against commercial property and loan against residential property.

What are the benefits of a Loan Against Property?

  • More loan amount:

In the case of LAP, you can avail around 60-70% of your property’s market rate or value when you mortgage it. That means you’ll receive a substantial loan amount in contrast to what a personal loan offers. 

  • Low-interest rate:

A secured loan reduces the lender’s risk and hence is available at a lower rate of interest in contrast to an unsecured loan such as personal loans. The rate of interest in case of LAP is generally about 9-15%, which is relatively lower in comparison to the 15-22% window charged in case of personal loans. 

  • Easy to avail:

It is easier to get a LAP. Some of the standard loan against property documents required are proof of identification, proof of income, address proof, residence ownership proof, among others. The documentation, as well as the verification process, is easy, and  amount is disbursed quickly. 

Conclusion:

These were few benefits of LAP that make it an ideal choice among people who own some property. You can utilise your property while enjoying the advantages of LAP and paying convenient EMIs.

Must Read: How to Calculate Loan against Property EMIs Using Calculator?

Are There Any Benefits Of Taking A Loan Against Property?

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A property is a financial asset. But, for most people, it is also an emotional investment. However, many people are hesitant of using this asset to get a loan.

But, if you need cash, then this is one option you must explore. Here, we have listed some of the major benefits of taking a loan against property to help you make an informed choice.

  1. You get a high loan amount – Most properties are high-value and you can get up to 70% of the value as the loan amount. It means you can meet heavy expenditures like paying college fees, wedding expense or financing a new business.
  2. You do not lose ownership of the property – One of the biggest advantages of this loan is that you can continue to enjoy the property for self-use. Additionally, you remain the owner of the property. Do remember that if you miss your EMIs regularly and the lender calculates your inability to repay the loan, they can sell the property to recover dues.
  3. The interest rate is lower when compared to other loans – Since you are pledging an asset to the lending institution, the interest rate is lower when compared to personal loans. The loan against property interest rate starts as low as 9% and goes up to 24%. But, the actual interest rates depend on a lot of factors as listed on the lender’s website.  

You are putting up a much-valued asset as collateral. So, you need to do your due diligence about the lender apart from researching the interest rate to knowing the loan against property documents required to make the right decision.

Additional Read: How to Ensure Maximum Savings on Loan against Property?

A Quick Guide To Loan Against Property


Loan Against Property
A loan against property is a loan that you can take from a lending institution against the property. You should be the owner of the property. However, if you not the sole owner then all the other owners of the said property, should be co-signers on the loan application form. So, let’s quickly look at the defining features of the loan:

There are eligibility criteria to be met

Every lender has eligibility criteria to meet for availing the loan against property, and it is different for salaried individuals and self-employed individuals.  You have to meet the age requirement, the educational qualification (for salaried individuals) and income requirements. If you are an SME, you are required to submit your ITR for two years.

  • You have to submit the documents asked for

Salaried individuals are required to provide three months of salary slips and Form 16. Self-employed individuals require VAT and Form 32. You will also be required to provide proof of identity, address,

  • You do not need to declare the end-use of the loan

You can use the sanctioned loan amount to meet any money needs ranging from paying for a child’s education to starting a new business. Always use the EMI calculator to calculate the EMI and loan tenure.

  • Defining features

You can get up to 70% of the value of your property as the loan amount. The loan property interest rate is lower than other loans, and it is dependent on type of property, income, documents, and credit history. Most lenders require you to have a minimum score of 700.  

These are just some of the features of the loan, but you must ask the lender’s representative for details before applying for the loan.

Must Read: What are the Essentials of Loan Against Property?

Top Four Reasons To Go For A Loan Against Property

property loan

A property is a valued investment, not only for its net worth, but also for the sentiments attached. Many people are, naturally, hesitant to put up a property as collateral for a loan. The article shares the top four reasons why such a property loan, as a loan against property is sometimes called, is an excellent idea.

  1. You are the owner of the property – You can use the property for residential or commercial use.  The only restrictions are that the title deeds are submitted to the lender and you do not have the authority to sell the property without loan repayment.
  2. Use the money to meet different needs – It is the perfect way to monetize an asset and get access to funds to meet various needs. Some of the needs you can cover are shopping, travel, wedding, education, medical, business and more. You should use the loan amount for legitimate activities.

  3. Affordable rate of interest – The loan against property interest rate is usually lower than the interest rate of other loans. The interest rate determines your monthly installment. You should use an EMI calculator to calculate the EMI and take an informed decision.

  4. Flexible tenures – Most lenders offer tenures going up to 30 years, making it easier for you to repay the loan. One word of caution, nonpayment of an EMI can lead to penalty, and repeated nonpayment can lead to loss of property. 

The final decision to take a loan against property should be based on requirements and after comparing the interest rates, trustworthiness and reputation of the lending institution.

Additional Read: Loan against property vs gold loan: which one should you take?

Advantages Of Taking A Loan Against Property To Consolidate Your Debt


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Before the Corona Virus hit the globe, the GDP of the Indian economy as a whole was projected to grow. Most people were sure of the strength of their careers and their ability to hold jobs, get promotions, and increase their incomes. It was but natural they took out different loans to meet the standards of a modern lifestyle.

Unsurprisingly, many salaried, as well as self-employed professionals, took loans to buy a house, car, bike, holiday plan, dresses, mobiles, and more. Now they are burdened with multiple loans, and for those who have clear titles of a commercial or residential property, taking a loan against property for debt consolidation is a great solution. Here is advantages of it go through it.

Advantages

  1. You have one EMI – Since all your loans are consolidated in one loan, you have to keep track of only one EMI. It reduces your chances of missing an EMI and thus increasing your burden.

  2. Interest rate is lower – Unlike a personal loan or education loan, the interest rate on LAP is lower. A lower interest rate means a reduced EMI, which further decreases your debt burden.

  3. No restriction on use – There is no restriction on the end usage of the loan and you can take it to meet any requirement for your day to day life or business need.

  4. Renegotiate the terms and conditions – Take the help of a financial expert to renegotiate the terms and conditions of the loan. They might be able to help you get a longer tenure with less stringent clauses.

These are some of the advantages of using your asset to keep afloat during these tough times.

Reference Read: Tips to Get a loan against property without an income proof

Here’s How You Can Avail Smaller EMIs With Loan Against Property

Loan Against Property
In contrast with the past, availing funds has evolved into an easier task. You can classify the finance options mainly into two – secured loans and unsecured loans. The primary difference between both is the presence of collateral, which the banks/NBFC can leverage to provide financial assistance. Secured loans like Loan Against Property carry more significant benefits than others.

Let’s know about LAP in the following section.

  • LAP- Better interest rates:

Loan against property (aka) LAP is one of the types of secured loans that have the edge over the other loan types due to their long tenure and lower interest rates. You can use a loan against property calculator to determine the tenure, interest rates, and the monthly EMI of your loan. Here’s how you can have low monthly EMI using a loan against property:

  • Tenure:

A longer tenure means lower monthly EMI. Again it all depends on your discretion. If you need a loan with a shorter tenure, your monthly EMI can increase. A smart planner will choose an optimal tenure after devising a repayment phase that would not hurt the finances.

  • Credit Score:

Your credit score plays a prominent role in lowering your monthly EMI. Most of the lenders are happy to provide funds to borrowers with higher credit scores. On a scale of 300-900, anyone above 700 stands a better chance of availing low-interest loans. 

Conclusion: 

If you wish to leverage your assets, you can use a loan against property calculator to avail better interest rates and plan your repayment phase accordingly.

Must Read: IS Availing Loan Against Property More Cost-Effective Than Others?

Loan Against Property- an Excellent Way to Cover your Personal Expenses

Loan against property is a type of loan which one can avail by keeping his/her property as a security deposit with his lender. It is said to be one of the best options for your expenses like medical expenses, paying for your dream marriage, or your study. One can use these types of loans according to their preferences and use. As loan against property is a secured type of credit; therefore, there interest rates on these types of loans are less as compared to unsecured loans. Anyone above 18 years of age, having a credit score above 650 and annual income is more than Rs. 3 lakhs is a loan against property eligibility criteria.

Loan against Property 

There are many benefits of LAP when used for personal expenses. Some of them are listed below.

1. Less rate of interest: As these loans are secured loans, the interest in these types of loans is less, which means you can quickly pay your monthly EMI’s.

2. More extended tenure: These loans have longer tenures as compared to other personal loans. This period can go up to 15 years.

3. No extra charges: In LAP, you do not need to pay any additional costs like prepayment charges if you are applying for a floating rate property loan. 

Conclusion:

If you need money urgently to meet your expenses, one can apply for a loan against property. One can avail of its benefits by visiting the lender’s website.

Must Read: Simple Process to Avail Loan Against Property

Comparison Between Loan Against Property And Unsecured Business Loan

property loan

With the different types of loans, the availability of funds has increased over the past few years. Due to an increase in funding by lenders, businesses are growing without any obstruction. Loans can be divided into two different types unsecured and secured loans.

In loan against property, one can avail benefits of credit by putting any property as a security of the loan. Loan against property loans is less as compared to that of unsecured loans.

LAP

After availing a Loan Against Property, one receives a certain percentage of asset value which is known as loan to value. If a credit is issued without any collateral, then this type of loan is known as an unsecured loan. Before applying for any business loan or taking a credit facility, one should keep certain factors in mind. Enlisted below are some considerations:

  1. Interest rate: Rate of interest varies from the type of loan you want to avail. The interest rate is determined based on the credit score of the borrower. Unsecured business loans generally have a high interest.
  2. Period of Loan: If longer tenure is chosen, then the monthly EMI’s are less. Loan against property offers a more extended period as compared to that of business loans.
  1. Eligibility: 

To avail the benefits of any credit facility, you must meet the ability of the loan. For unsecured loan your credit rating, salary plays a crucial role in determining the eligibility.

Conclusion:

Before availing one of these loans, one must always compare different lenders. It is advised to know your requirement before availing any loan.

Additional Read: Essentials of loan against property that you should check

Consolidate Your Debts With Loan Against Property

property loan

Debt consolidation is a common practice among borrowers, which means taking out a new loan to pay off the previous loans quickly and comfortably. Though you can avail an unsecured loan to consolidate your debts, it is advisable to go for a secured loan as it provides a lower rate of interest. A loan against property can be one of the best options for debt consolidation. 

You can receive a loan against property from different lending institutions by guaranteeing your residential or commercial property as security. But, before you apply, it is essential to check the loan against property eligibility criteria provided by every lender. 

Now, let’s have a look at how loan against property can help you consolidate all your debts.  

1. High loan amount

By availing a loan by pledging your property, you can get a rather larger loan amount, which usually depends on your property’s current value. With such a high amount, you can easily pay your multiple debts in one go.  

2. Lower interest rates 

The interest rates are comparatively lower for the loan against property as it is a secured loan. Therefore, if you are repaying high-interest debts, then this loan can help you lower your overall EMIs and interest rates. Use a loan against property calculator to calculate your EMI and interest amount to be paid each month.  

3. Any property as collateral

You can secure this loan by pledging various types of properties ranging from your home, office space, or any other property you own. This way, you can choose the most high-priced property and get a decent amount to clear your debts.  

On the whole, loan against property is a convenient solution to not only consolidate your debts but also boost your credit score and avoid penalties.

Reference Read: loan against property v/s home loan- Which one to Choose?

 

Steps To Follow While Applying For A Property Loan

property loan

Property loan is one of the oldest and most availed loans in India. The process is approved upon mortgaging the property. Usually, banks follow a process and provide credit according to the property valuation (50%-70% of the property value). A valuable property can help you avail substantial credit amount when you need it in the form of Loan Against Property. Lenders usually do not demand you to provide details of usage of the loan amount.

Top 7 Features and benefits of a loan against property are listed as follows:

  1. A secured loan allows quick processing of a loan
  2. The loan amount can be used without any specified end-use from the lender
  3. Rate of interest is significantly low
  4. Long tenures are allowed
  5. Ability to apply for top-up loans
  6. Hassle-free application process
  7. Flexibility in eligibility criteria of the borrower

Conclusion:

Loan against property is secured loans that take your property as collateral. It is often used to generate funds and pay off dues and medical bills. Being a secured loan, you need not pay high-interest rates. You can check your eligibility for a loan against property online. After getting the amount, you can use it to pay off your dues, make arrangements for a wedding, or buy a luxury item.

Must Read: All You Need To Know About Loan Against Property