Loan against Property (LAP) can prove to be of great help if you are in need of a large amount of money. In case of loan against property, you can avail a loan by pledging your house or property as collateral with the financial institution. Minimal documentation, instant loan approval, quick disbursal and flexible repayment option are some of the primary benefits of availing a loan against property with a leading financial institution. Also, the amount availed through a loan against property can be utilized for various purposes such as business expansion, funding children’s higher education, managing travel and wedding expenses, for medical emergencies, debt consolidation, etc. Due to its multipurpose usage, loan against property has emerged as one of the most preferred financing options to meet immediate fund requirements.
Important points to consider before availing a loan against property
Calculate your loan eligibility
Before applying for a loan against property, you should calculate your loan eligibility online by using an online eligibility calculator. This will reduce the rejection chances of your loan application. You should avoid using a loan against property as a form of risk capital.
Evaluate your repayment capacity
Before you go ahead and apply for a loan against property, you must carefully evaluate your repayment capacity. This is because a loan against property is a secured loan, in which your property acts as a collateral. Therefore, if you fail to make timely repayment of the loan, the lender reserves full right to seize your property to recover the loan amount. Hence, you should opt for a loan against property only if you are sure about repaying the loan amount on time.
Calculate your EMI beforehand
Loan against property is a secured loan. Due to this, timely repayment becomes extremely crucial. Therefore, before availing the loan amount, you should calculate your EMI with the help of loan against property EMI calculator. This will give you an estimate of your EMI and allow you to plan your monthly budget more efficiently. You should always opt for an EMI that enables you to make timely repayment of the loan without straining your finances.
Now that you have a fair understanding of things to consider before availing a loan against property, let us have a look at some of the primary benefits of availing this loan.
Benefits of loan against property
Higher loan amount
A large amount can be availed through loan against property. The loan amount usually ranges from 60-70% of the market value of the property being mortgaged.
Lower interest rate and easily accessible
Loan against property is a secured loan, in which your property acts as collateral. Therefore, the rate of interest is generally lower as compared to unsecured loans. Also, financial institutions are less hesitant in providing such loans. So, you won’t find it challenging to avail a loan against property. In fact, with leading financial institutions, you can avail a loan against property online from the comfort of your home.
Low prepayment charges
With leading financial institutions, you also get the option to close your loan against property by making prepayments towards your loan. The prepayment charges in case of loan against property are low.
Long repayment tenure and affordable EMIs
Loan against property is generally available for a tenure up to 15 years. As a result of long repayment tenure, the monthly installments are comparatively lower. Therefore, it is one of the most preferred options for those who cannot afford to pay higher EMIs. However, if your financial status is decent, you should consider opting for a shorter tenure. This may increase your monthly EMI, but at the same time will help you save a large amount of money towards the interest paid.
How to apply for a loan against property?
You can easily apply for a loan against property with leading financial institutions by following the steps mentioned below:
- Visit the lender’s official website.
- Go to the “Loan Against Property” section and hit the Apply button
- Fill in the online application form by providing your personal and employment details
- Specify the loan amount and the property details
- Upload the required documents
- The lender will verify your application and the loan amount will be disbursed shortly
Documents required for a loan against property
The basic documents needed to avail loan against property are mentioned below:
- Address proof
- Identity proof
- Latest Bank Statement showing income for the past 6 months
- Salary slip if the borrower has a job
- Documents of the pledged property
- Certified financial statement of last 3 years for self-employed individuals
Lastly, it is advisable to compare various loan offers provided by different lenders before availing a loan against property. This will help you avail a loan that best suits your needs. Make sure that you opt for a lender that offers low-interest rates and another attractive loan against property features. Also, do not forget to read and understand the terms and conditions of the loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.
