It’s All In The Name: Loan Against Property (LAP)
What is a Loan Against Property?
A loan against property is a secured loan that is sanctioned keeping an asset as a mortgage with the lender. This asset can either be an owned land, a house, or any other commercial premises. The asset remains as collateral with the lender until the entire loan against the property amount is repaid.
CHOOSE A LOAN AGAINST PROPERTY THAT SUITS YOUR NEEDS
A loan against property (LAP) is a secured loan that banks, housing finance companies and NBFCs provide against residential or commercial property. These loans are usually offered at a lower interest rate as compared to a personal loan or business loan and are disbursed at a reasonable time. Anyone with a pre-owned property can avail such loans, whether they are salaried or self-employed in a business or professional setup. The quantum of loan sanctioned is also higher than what may be offered in other available options.
The demand for LAP is increasing among individuals because of three primary reasons:
- It is cheaper than a personal loan;
- The applicant can continue to occupy his or her property even after the loan is availed;
- The loan can be used for a variety of purposes such as unforeseen medical expenses, children’s higher education and marriage, or setting up a business.
How to Get Lowest Home Loan Rates in India?
Home loan interest rates are at a 15-year low, so almost all the banks are offering lower interest rates on home loans compared to what they were offering in the previous financial year. However, to get the lowest home loan interest rates, compare rates offered by lenders. Always use a home loan EMI calculator while comparing rates; it will help you estimate how much you have to pay every month against your loan.
Home Loan Tax Benefit
Housing Loan Interest Deduction Feb 2021
Read on to know the various aspects of a Loan Against Property and its benefits.
Benefits of Loan Against Property
The various benefits of a Loan Against Property are:
Competitive interest rates
Since a Loan Against Property is a secured mode of finance, the interest rates are comparatively lower. This results in lower EMIs, making it easy for the borrower to address other financial needs without straining his/her budget.
Long repayment tenure
A Loan Against Property generally has long repayment tenure. This brings down the EMI, thereby facilitating repayment and easing the burden on the borrower.
Continuous ownership of the property
A Loan Against Property helps the borrower unlock the dormant potential of the asset. The borrower continues to own and use the property while availing funds for the same. However, it’s essential to not default on EMI which might lead to legal hassles in the future.
Eligibility for Loan Against Property
There is a slight difference in Loan Against Property eligibility for individuals and businesses. Generally, for salaried individuals, lenders fix a certain annual income below which they don’t approve the application. There’s also a certain age (minimum and maximum), criteria for lending.
Businesses, too, need to have a certain turnover for availing a Loan Against Property. Today, most lenders spell out the eligibility norms on their websites.
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