Loan Against Property
As the title implies, Loan Against Property (LAP) is availed keeping your property as collateral to lender. Generally around 40% to 60% of the property’s market value is offered in form of a loan. To be eligible for LAP, the ownership title of the property must be clear. The borrower is supposed to furnish documentary proof of the same along with other documentary requirements.
Benefits of Taking a Loan Against Property
Here is the list of of top 6 benefits of availing loan against property:
- 1. Affordable Option
As Loan against property (also known as a Mortgage Loan) is a secured loan, the rate of interest charged will always be lower than unsecured loans (e.g. Personal Loan). So, if the loan ticket size is on the higher side, then you can save money in form of interest.
- 2.Serve Variety of Needs
There is virtually no restriction on a customer on how he or she utilizes the funds. You can use that money to meet the expenses of marriage, on medical treatment, for funding education, overseas travel, for setting up a new business or anything else that is legally permissible.
- 3. Different Property Types are Eligible
LAP can be availed for self-owned residential property, self-owned commercial property, self-owned but rented residential property & self-owned but rented commercial property. Some financial institutions even fund on the basis of a piece of a land.
- 4. Overdraft Facility
LAP overdraft facility caters to the funding requirements of business(es) for their short term working capital needs. With Overdraft (OD) facility, you can borrow funds despite having insufficient balance in your current account. The overdraft limit is determined by the property value & past repayment behavior of the borrower.
- 5. Flexible Repayment Options
Being a secured loan, lenders are willing to grant loan for longer period as compared to personal loans. Generally, loan tenures can vary from 5-15 years and in certain cases can be as long as 20 years. Longer tenure means lower EMI which translates into comfortable repayment without affecting immediate cash flows.
- 6. Top up Facility
In case of additional fund requirement, one can apply for a top-up loan on the same property. In most of the cases, without much hassle, the same bank will extend you the facility. If the property value increases during loan tenure, then the borrower is eligible to receive additional financial benefits under top-up option.
Loan Against Property is one of the popular products among borrowers due to simple documentation, faster approvals and convenient repayment options. In LAP, lender receives conditional right of ownership on given property until the loan is completely repaid. Ownership will transfer to lender only if the borrower defaults and unable to repay loan. Through LAP, the property owner receives substantial funds at lower interest rates with long tenure option.
We hope that this article will encourage all the buyers who are thinking about taking loans against property. If you still have any query left, then you can contact us at 1800 103 7491 or write an email to us at firstname.lastname@example.org
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