Sat. Jul 13th, 2024

A property is an asset in many ways. Not only does it offer shelter to you and your family, but also can be a great source of financial assistance at times of emergencies. With a loan against property, you can deal with any such contingency. This secured credit is available in India from various NBFCs and comes with zero end-use restriction that allows utilising the funds for any emergency financial needs. Here is a detailed look at how you stand to gain from LAPs.

Advantages of loan against property

  1. Almost no prepayment charges

Loan against property providers rarely charge any additional fees for prepayment of the debt. When you have access to some extra funds, you can easily use it to reduce the repayment tenor through prepayment without incurring any additional charges.

  1. Low-interest rate

One of the greatest advantages of secured loans is that due to the addition of collateral, the interest rate for such credit remains contained. The same is true for a loan against property. In most cases, the rate of interest for property loan stays within 12% and 15%. In comparison, unsecured loans, such as personal loans, charge interest at 15% to 25%.

The lower interest has a marked effect on your EMIs, reducing your loan repayment burden.

  1. Longer tenor

Unlike personal loans offering up to 5 years to you to repay the debt, LAPs have substantially greater repayment duration. The tenor is flexible for such loans, ranging between 2 and 20 years. When the repayment is spread over a longer period, the EMIs decrease significantly.

  1. Substantial loan amount

Even though the loan amount depends on several factors, chief among them is the valuation of the collateral property, the upper limit for such loans is considerably greater than unsecured credits. For instance, most lenders today offer up to Rs. 3.5 Crore as a loan against property to eligible applicants.

  1. Manageable EMIs

Since you have an option to pick longer tenor for the loan repayment, EMIs are easy to manage. Those looking to reduce monthly instalments can pick the longest loan repayment duration for the lowest payments. Therefore, mortgage loans are versatile products, suitable for people of different financial conditions.

  1. No usage restriction

When you opt for an education loan, you must provide proof of the course and college admission during loan application. However, LAP funds are free from end-use restrictions of any kind. You can take the loan for your wedding or for overseas higher education or any other need.

  1. Simple application process and fast approvals

The loan against property process is easy to follow, unlike other financial products involving complicated application procedures. NBFCs tend to relax their eligibility criteria for LAPs because of collateral pledging through which they are sure to recover the money, even if you fail to repay the debt on time.

However, make sure you find out how a loan against property is processed before applying. It should make your life easier and ensure a hassle-free application procedure.

Additional information about LAPs

People who own a house where they reside can pledge the same as collateral for an LAP. Moreover, those owning plots of land are also eligible to apply for a loan against property.

The only factor you need to remember is that whichever property you pledge should be free from a mortgage or litigation.

Deciding the loan amount

Lenders check a variety of factors before approving a certain amount as LAP. Listed below are some of these factors.

  • The market valuation for the property is the first thing that NBFCs check. Most lenders provide up to 60% of the property’s price as a loan against property.
  • Your income.
  • Your age.
  • Your CIBIL score is another important determiner of the loan amount. Improve your scores before applying to stand a better chance of receiving greater sums as loans from financing institutions.

Companies provide pre-approved offers on loans against property, making them easier and faster to avail. These offers are also available on a range of secured and unsecured credits, namely home loans, personal loans, business loans and more. You can check your pre-approved offers by providing your full name and phone number.

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