Loan against Property

Setbacks can come at any time and when it is a financial one it’s like uninvited guests.  It comes unannounced and hence our plannings and savings can also fail. 

Most of us plan well and imagining emergency scenarios we create hypothetical emergency funds. But is that fund enough for all the scenarios? Our savings may help us in case of such an eventuality, or some people might not have that much funds ready which is needed at that time. In such a scenario, options are limited – you may ask with your friends and family for help or you can take a loan from a bank. In both the scenarios it is doubtful that you will get you desired amount. What if your friends and family are not ready to help or what if the bank refuses to lend you due to your eligibility or profile problem?

How you are going to deal with this situation? What’s the option where help is assured?

The answer to all these questions is taking a loan against property.

Choiceworthy Feature & Benefits of a Loan against Property

  • Loan against Property is a secured loan, which can be availed when you mortgage your property. The loan amount which you get through it can help you to meet your personal as well as business needs as the amount which you get through mortgage can be higher depending on your requirements. 
  • We can mortgage our property to a bank or any financial organization, against the mortgage bank sanctions a loan against property.
  • One can use the money borrowed for different purposes without any restriction.
  • The loan can be taken against any residential, commercial property or any land including the agricultural land, which is on your name.
  • Loan against property can be availed by both salaried and self-employed professions as well as individuals.
  • The maximum tenure period for Loan against Property is of 15 years, but it also depends on the eligibility & profile of the borrower.
  • A borrower can get an LTV of 60-70% through a loan against property, this means when you take a loan against property, the amount which you get is 60-70% of the market value of the property which you have given as a mortgage.

Benefits of Loan against Property

  •  Provides you a larger amount.
  •  Interest rates are lower than other loans.
  •  Long tenure period
  •  Lower EMI
  •  No restriction on the use of money borrowed

The Interest Rate for a Loan against Property

The interest rate for a loan against property is lower than other unsecured loans. The reason behind this is the security which you provide to the bank in the form of property mortgage. The lenders feel assured about the repayment as they have the property papers with them. The borrower can choose from the fixed and floating rate of interest as per their preference. 

What are the risks involved?

In case when you are unable to repay the loan, lenders have the full authority to sell the property and recover their money from that. 

Hence when you take a loan against property, you are always at a risk that the ownership of your property can go when you are not able to repay the borrowed amount.

The Documents Required to avail a Loan against Property

  • Proof of identity i.e. The KYC documents
  • Proof of Address
  • ITR filed documents
  • Last 6 months bank statement
  • Property documents
  • Cheques 
  • Passport size photograph

Who is Eligible for a Loan against Property?

LPA eligibility also depends on the credit score, income, age, and qualification, number of dependents, assets and on the employer with whom the applicant is working. Once the loan is approved is it either disbursed in full or in installments as instructed by the borrower? The loan is only approved when the applicant can meet the eligibility criteria set by the lenders.

Why should you go for a Loan against Property?

Mortgage & loan against property is best to opt for when you need a huge amount of money. LAP is also recommended as there is no restriction on the use of amount borrowed, from meeting your personal needs to your business requirements, LPA can be used for all.

Another advantage of taking a LAP is you get the money at a comparatively lower interest rate. 

Suppose you need ₹15 Lakhs and you to fulfil your requirement you take a personal loan, for which the interest charged is 15% per annum for a tenure period of 5 years.

For the same amount, if you would have gone with a loan against property, the interest charged charge would have been 10% for a tenure ranging from 5 to 10 year. This way you could have saved much while going with a LAP.