Real estate investment is a great way to grow your wealth over time. Taking this further, using a Loan Against Property (LAP) can be a smart decision to help you achieve this. This loan allows you to leverage the value of your property and get funds immediately. You can also use this money to buy more properties. Read this blog to learn about how to use LAP for real estate investment.
Insight on Loan Against Property
LAP can be defined as a secured loan where you keep your residential or commercial property as collateral to get the loan. Top lenders like Hero FinCorp offer up to 75% of the property’s market value as a loan. You can also get a repayment tenures of up to 15 years. This type of loan provides large funds at competitive interest rates, making it an attractive choice for investors.
Key Features of LAP for Real Estate Investment?
- High Loan Amount
At Hero FinCorp, you can get loan amounts of up to Rs 7.5 Crore (depending on the value of the property value and its location). This large sum can help you buy a new property or invest in other real estate projects.
- Low-Interest Loans
When we talk about other loan types, LAP has a lower rate of interest to offer. Having a low interest rate on Loan Against Property allows you to easily manage your finances in the long-run.
- Flexible Repayment Tenure
If you choose Hero FinCorp, you can repay the loan over a period of up to 15 years. This in turn gives you a good amount of time to manage your finances and focus on your investments.
- Leverage Without Selling
LAP lets you leverage the value of your property without selling it. This in turn enables you to hold onto an appreciating asset while exploring new investment opportunities in the future.
Benefits of Using LAP for Real Estate Investment
- Wealth Creation
Investing in real estate through LAP can help you grow your wealth as property values increase over time. Wealth creation is easy with LAP when you know the right time to invest and leverage accordingly.
- Steady Income
Rental income from your real estate investments can cover your LAP EMIs, reducing financial strain. This way you can easily use your property to churn money over a long time period.
- Asset Retention
Loan Against Property allows you to use your property as collateral without selling it, so you retain ownership while accessing funds.
Eligibility Criteria
Here are the eligibility conditions when you apply for a loan through Hero FinCorp.
- Loan Amount:
– Minimum: Rs 20 Lakh
– Maximum: Up to Rs 7.5 Crore (Tier 1 & Tier 2 cities) and Rs 3 Crore (Tier 3 cities).
- Profession:
– The loan is only available for business owners or self-employed individuals.
- Age:
– Applicants must be between 25 and 75 years of age.
- Property Value:
– Loan amount can be up to 75% of the property value or Rs 7.5 Crore, whichever is lower.
- Credit Score:
– Even applicants with a low or not so perfect credit score are eligible.
- Tenure:
– Flexible repayment tenure of up to 15 years is allowed.
- Interest Rates:
– Competitive and low-interest rates offered to suit every financial need.
Things to Consider When Using LAP for Real Estate Investment
- Market Fluctuations
Real estate markets can be unpredictable. Research thoroughly to minimise risks and focus on areas with consistent growth.
- Repayment Responsibility
Failing to repay the loan can lead to the lender seizing your property. Plan your finances carefully to avoid defaulting.
- Interest Costs
Although LAP has low-interest rates, it’s essential to factor in the total cost of borrowing, including interest over the loan tenure.
- Over-Leveraging
Avoid taking on more debt than you can handle. Over-leveraging can lead to financial strain and limit your ability to invest further.
Tips to Maximise the Benefits of LAP for Real Estate Investment
- Choose the Right Property
Invest in properties located in areas with growth potential, such as upcoming commercial hubs or residential zones with rising demand.
- Negotiate Loan Terms
Compare offers from multiple lenders to get the best interest rates, repayment terms, and loan amounts.
- Use a Loan Calculator
An online loan calculator can help you determine your EMIs, making it easier to plan your budget and avoid financial strain.
- Build a Contingency Fund
Set aside a portion of the loan amount as a contingency fund to handle unexpected expenses related to your investment. This is very important because having required funds when needed later in life helps you tackle emergencies with ease and confidence.
- Monitor Your Investments
Keep track of property market trends and rental income to ensure your investment continues to generate returns. Knowing the whereabouts of your investments as per market trends helps you stay updated and decreases the chances of any loss over time.
Conclusion
LAP is a robust financial tool when used smartly. You can use this loan to leverage the value of real estate in the future. You simply need to understand the ins and outs of this loan and make decisions accordingly. However, it’s helpful to plan your investments carefully, research the market, and manage your finances responsibly. With the right strategy and the right lender like Hero FinCorp, using LAP for real estate investment can help you achieve your goals while retaining ownership of your property.
Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader’s discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
