One may need finances throughout one’s life for various purposes. These include building or buying a home, planning a wedding, investing in a business, or accomplishing medical needs.
This is when your valuable assets such as your land and other property play a huge role as they can be the collateral against which you can get loans.
Talking about the loan against property, it is a kind of secured loan with a comparatively lowered interest rate and easy to avail with a higher probability of approval by the financial institutions.
A loan Against Property (LAP), is also known as a mortgage loan, wherein several factors such as credit score, type of the property, tenure of the loan, and the profile of the creditor, are taken into consideration for providing the loan against property.
Although a personal loan is the most availed loan in the present-day market of creditors, a loan against property is one of the best alternatives due to its fast processing and cheapest interest rates.
Similarly, there are several other benefits of a loan against property that you will get to learn in this blog on the benefits of availing a loan against property.
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Of the many advantages of a loan against property, quicker and easy approval is found to be a prominent benefit. Availing of a loan against property is more hassle-free than getting an unsecured personal loan.
While availing the loan against property, one needs to take care that the property title is free from any kind of mortgage legal litigation, or else it can be a barrier to the whole process.
Flexibility to the End-user
The amount of loan availed by means of the loan against property is free from any restriction on usage. The person borrowing the loan amount can use it for any purpose of his or her choice.
Borrowers can use the loan for any purpose such as home renovation, pursuing higher education, constructing a house, medical expenses, etc. A loan against property can suitably be used for all monetary needs of the person.
A loan against property is way more economic for fulfilling the needed financial support. A loan against property interest rates is also more cost-effective than unsecured multipurpose loans.
The interest rate of a LAP generally ranges between 12% to 15% whereas the interest rate of a personal loan is a bit higher, ranging from 12% to 25%.
Flexible Tenure of Loan
The loan tenure of a loan against property is a bit long. The tenure of a loan against property can be extended for 15 years while the longest tenure of a personal loan is usually 5 years.
An important point to note here is that the longer tenure creates less financial pressure on the borrower.
Borrowing Against Different Property Types
Borrowers have many property options for availing a loan against property. You can mortgage a self-owned home, a commercial property and even a rented residential property or it can be a piece of land that you own.
In case you are looking for a loan against property, you may consult us.
Usually, the pre-closure of a loan against property is free from any charges or penalties. Borrowers may close a loan against a property account by paying the outstanding amount earlier than the decided term.
But if the loan is on a fixed interest rate, you may need to pay a nominal amount in the name of prepayment charges.
Optimum Use of Property
A loan against property provides the borrower with the best value of the property. It unleashes the actual potential of the property. Your property can be proven to be excellent collateral for secured loans.
As a borrower, you also have the authority to retain the ownership of the property while availing of a loan against the same property.
You must be aware that a loan against property has a top-up facility. Like a home loan or personal loan, borrowers can take a top-up loan on an existing loan against property. A top-up on a loan against property is availed by mortgaging the property but with minimum paperwork.
Minimal Debt Burden
The debt burden of a loan against property is much lighter when compared to a personal loan. The two factors that make a loan against property a lighter debt:
- The low-interest rate and
- Longer tenure.
Both factors make the EMI amount a smaller one, hence the debt burden is lighter when it comes to a loan against property.
Need expert advice on availing Loans Against Property? Then, talk to one of our consultants.