There are various financial services available today, loans being one of the most common ones. While various loans are collateral-free if you want a loan for a higher amount you are required to keep an asset as security with the lender until you have completely repaid your loan amount and interest.
One such loan is Loan Against Property. A secured loan offered against your property, with this amount, you can buy a home loan, fund your education, start a business, or any other expenses you want to incur. If you too are planning to apply for Loan Against Property, this property will help you in understanding what it is and what are the things you must consider before applying.
What are some benefits of Loan Against Property?
Some benefits include:
- Secured Loan: A form of secured loan, where one is required to pledge their property to avail the desired funds. The loan requires a lot of paperwork, during the loan application process.
- Longer Tenor: LAP comes with a longer repayment tenor. The tenor can range between 2 to 20 years, which allows you to pay back the loans conveniently with ease, without stressing about the EMI.
- It has lower EMIs: As the tenor is larger, the EMIs for Loan Against Property is lower. Thus, someone who has a lower income can opt for this loan type.
- Different Property Types: As collateral, you can use any type of property like residential, commercial, the plot of land, even under-construction properties can be used as collateral.
Things you should know
Some of the things that you must check before getting a loan against property are:
- Know your property value: Before you use your property as collateral, make sure you know the value of your property. Based on the value your loan will be approved and the interest rate finalized. The value of the property will include age, the locality it is situated in, the reputation of the builder, size, and amenities offered. A property with higher value, located in a good locality will fasten your loan process as the risk is low.
- Check the eligibility criteria: The property loan eligibility criteria will determine whether you will get the loan or not. It may vary for a different lender, but some criteria include age, minimum income, citizenship. Knowing the eligibility ensures that you choose the lender whose eligibility criteria you follow, decreasing your chances of loan rejection.
- Terms and Conditions: For each lender, the interest rate, tenor, and loan amount that you can get may vary. So before applying for Loan Against a Property know all the terms and conditions for the loan. The terms one must know are:
a. The approved loan amount you are eligible for.
b. The interest rate being charged by the Lender.
c. Loan against property documents required.
d. Tenor allowed for repayment of loan and interest.
- Extra charges and benefits: With growing competition, lenders often provide extra benefits to some customers. So, ensure that you check for any extra benefits which you might get your hands on. The services can include assistance with finding the right property, guiding on the technicalities associated with buying property and even customized insurance schemes. Being aware of the value-added services that you can make use of will make the loan more beneficial for you.
Also do not forget to ask about any extra fee that the lender may charge for your loan processing.
The above factors may not guarantee you a loan but will ensure that you choose the best lender who is offering your required loan the amount at the lower interest rate and higher tenor.