Unlike others, availing a loan against property is a pretty safe and sound way of handling those financial emergencies. Even when you need to own an esteemed asset, this loan can be executed by unlocking substantial loan amounts against your owned property, be it for the expansion of business operations or education, medical emergencies, or any other pressing personal needs.
What is having property ownership?
A (LAP) is a secured loan where you pledge your residential or commercial property as security. The amount borrowed is determined by the value of your property, your income, and your repayment capacity. As this is a secured loan, interest rates are generally lower than they are for unsecured loans like personal loans. Also, LAP has flexible terms for repayment that make it possible to manage your financial books better.
Benefits of such loans
There are various benefits for taking a loan. It is quite favourable for individuals as well as business houses.
1. Huge Loan Amount: You can get a decent amount to the market value of the property. Using it, you would be able to pay for some very big expenses without using up your own savings.
2. Lower Interest Rates: Since the loan has security attached to it, lenders lend loans at lower interest rates as compared to personal loans or credit cards.
3. Flexibility in Repayment Tenure: LAPs have longer repayment tenures. As a matter of fact, sometimes even up to 1520 years. This reduces the monthly EMI burden and gives an individual much breathing room on managing his finances.
4. Retained Ownership: Despite mortgaging your property, you retain ownership of the same and can avail of the usage thereof either for residential purposes or commercial purposes.
Eligibility to Avail Such Loans
Once you know the eligibility criteria and the documents required for a home loan, availing a loan is quite easy. Most lenders will ask for the following documents for home loan
- Proof of identity
- Aadhar and PAN card
- Proof of income
- Salary slips or ITR for the last two-three years
- Property papers
- Title deeds and property tax receipts
- Proof of residence
- Utility bills or rental agreement
These help lenders evaluate the creditworthiness and lawfulness of the mortgaged property.
Consider Before Applying
Of course, it’s attractive on its part, but you must weigh your options before availing a loan. Here are a few key considerations:
- Loan to Value (LTV) Ratio: You can borrow up to 6070% of the market value of a property from a lender. Decide whether this money will help you meet your requirements.
- Interest Rates: LAP rates are lower; however, you must crosscheck the other lenders’ interest rates as well to get the best interest rate available in the market.
- Repayment Capacity: You may calculate your EMIs and at the same time determine if you can afford the monthly payments. Missing EMIs can attract penalties or, in extreme cases, loss of property.
- Processing Fees and Hidden Charges: Always ensure to check on processing fees, prepayment charges, among other costs beyond the interest.
How to Apply to have these loans
Securing a loan is very easy. First of all, decide how much amount you wish to be sanctioned as a loan amount, based on the worth of your property. Collect the necessary documents required for home loan and apply to the lender. Once the papers are submitted and the same application form is filled, the lender would himself visit your property and check your financial status too. Then, if he gets satisfied with your property and your financial status, only he would transfer the amount into your account.
Conclusion
Loan against property is a very good solution if you possess property and would be required to raise a huge amount of money, as it strikes the perfect balance of low interest rates combined with high loan amounts and flexible options for repayment. Pledging the property makes it possible to lock in the financial potential of the property while retaining ownership. It may be needed for personal or professional use; it can be the financial boost required in such situations.
