In times of financial
trouble, a loan can act as a life savior. One loan that can be a solution to
numerous financial problems is loan against property (LAP). Loan Against
Property is a secured loan which is provided against the mortgage of a
property.
LAP can be applied by
people who are self-employed and are in need of a huge amount of money. By
applying for LAP, they can secure funds without renting or selling out their
property.
When once applied for LAP, the property of the
borrower is kept as a mortgage. The loan amount varies around 40-70% of the
market value of the property.
Advantages
of Loan Against Property in India
Can Be Obtained Easily
Obtaining Loan Against
Property is not much of a hassle. Once the borrower presents security (read –
property) and gets an approval on it, loan sanction doesn’t take too much time.
Can Help in Fulfilling Various
Purposes
Loan Against Property can be used for a number
of purposes, such as: To meet the financial needs of a commercial activity,
trade, or for expansion of business. To suffice a family member’s educational
expenses. To make repairs, extend or renovate an already existing commercial or
residential property. For urgent and unavoidable medical treatments.
Interest
Rates Are Low
Loan Against Property can be one of the best
options to opt for as the interest rates of this loan are comparatively lower.
Usually the interest rate of Loan Against Property ranges between 11.5% –
13.75% while for personal loan it hovers between 16% – 20%.
Longer Repayment Tenure
Nothing can be more
beneficial for a borrower than getting longer repayment tenure. Loan Against
Property offers the borrower a longer repayment tenure, generally between 10-15
years which eventually eases out the burden of EMI(s).
Optimum Use of Idle Property
Many people own a
property that lies unused for a long span of time. To make optimum use of such
property, you can secure a loan Against it. This allows the borrower to retain
ownership of the property, and at the same time have an opportunity of
acquiring a loan at a low interest rate too.
Continuous Ownership
In case you acquire the loan, but are not able
to repay the amount, you have the flexibility of selling off the property and
settling the loan amount. This gives you a chance to continue the ownership of
the loan secured, along with the benefit of having surplus cash as well.
Flexibility of Loan Amount
Another benefit of Loan Against Property
is the possibility of securing a larger amount of funding. The lenders allow
flexibility of loan amount, depending on the type and value of the property.
