Loans, in general, have become the saviour of the world. They provide you with any amount of money to fulfil your financial needs. However, the loan industry can be a bit confusing, especially if you are new to it. That is why we have brought all the details about one of the standard loan products, i.e., loan against property. You must read all the information before applying for it.
Loan Against Property Meaning
Loan against property, mortgage, and property loan, all these means just the same thing, i.e., borrowing money by keeping a property as collateral. It can be any type of property, but you need to be its owner in order to avail of the loan. You can get up to 70% of the property’s current value. There is an associated percentage of interest rate that you need to pay in monthly instalments, along with the principal amount. You can also determine the tenure for repayment. All these factors together influence your loan EMIs.
Important Factors about Loan against Property
You must know all these aspects of the loan to avoid any confusion at a later stage.
- Interest Rates: The lender determines the interest rate percentage after considering various factors like tenure and your CIBIL score. You can also select from fixed and floating interest rates as per your preferences. Another interesting thing here is that the mortgage interest is lower than most of the other loans.
- Type of Property: Usually, residential and commercial properties are accepted by lenders. If you own a real estate property, you may not be able to avail of the loan.
- Tenure: A longer tenure generally accompanies mortgage loans because of the high principal amount. This makes the EMIs affordable for everyone. You can get the loan for up to 30 years.
- Construction: Most of the lenders prefer properties that are entirely constructed and are freehold.
- Approvals: As these loans are backed by collateral, you need not deal with much hassle in getting them approved. Just ensure all the relevant documents are available with you.
- Ownership: The loan doesn’t take away your right on the property. You remain its legal owner throughout the tenure.
When to Take Loan against Property?
As there are several loans in the market, it is a common confusion that when should you go for a loan against property. People generally opt for this loan in situations like:
- Business Requirements: If you plan to expand your business or perform any such action, you will need a large sum of money. LAP is the best option here as it can provide you with significant funds for your purpose.
- Higher Education: To fulfil your child’s dream, you will have to fund their higher education. But it may not be possible because of the current extensive fee structures. If you don’t want to suppress your child’s education, LAP can help you out.
- Wedding: Indian weddings are one of the costliest events of people’s lives. But it is also crucial to get it right because it mostly happens only once. You can do it easily with a LAP.
- House Renovation: Loan against property funds can also be used for renovating your house as per the modern living standards.
- Medical Emergency: Sometimes, funds in your medical account/policy falls short for bigger procedures. In such circumstances, you can opt for a LAP.
Therefore, you can get a LAP whenever you need massive money, and there is no other source available. You just have to check the property loan interest rate so that you can ensure the repayment amount.
The most exciting thing about loan against property is that you don’t have to specify your loan’s purpose. So, in case, you require more massive amounts of funds, you can easily use your property to get them.
You can make your loan processing easy and smooth by keeping all these loans against property documents required by the lender handy.