Sometimes, we all need a helping hand, be it to help you out of a dire situation or to help you get to your dream destination. This helping hand can come in the form of a loved one or a trustworthy friend or a good Samaritan. What if it could come in the form of a loan? Do you need enough funds to fulfill your daughter’s dream of a destination wedding? Looking for a way to fund your child’s ambition to study abroad? Or a medical emergency may require you to arrange a large amount of money in a short while. The helping hand you need for all of these troubles: Loan Against Property.
We all are familiar with the notion of secured loans. A loan against property is much like a secured loan, in fact, it is a type of a secured loan. There are different types of secured loans, each demanding different types of collateral. A loan against property, also known as LAP, is a secured loan that you avail by pledging your property assets, be it residential or commercial, owned by you or your business, as the collateral. The fund you receive from the loan is not restricted to any one purpose like your home loans or business loans, on the contrary, it is used to meet all kinds of needs.
There are several advantages to availing of a LAP. Let’s dive into some of the most beneficial features of the same.
1. Long repayment tenure: If the loan repayment tenure is less, it can lead to significant financial stress on the borrower as the EMI increases accordingly. For Loan Against Property, The repayment tenure is much longer than the other types of loans. Usually banks offer a repayment tenure up to 10 years (120 Months), the loan tenure being offered varies depending upon the policies of the bank. This helps the borrowers with financial flexibility thus allowing them to make timely payments and manage their other expenses.
2. Lower interest rates: Rate of interest is generally lower in case of secured loans. This is because the risk for the bank/lender is less as compared to unsecured loans since the property is mortgaged as collateral. Since Loan against property is one of the secured loans and involves pledging of one’s property as a collateral, lenders face less financial risk and offer lower rate of interest compared to unsecured loans like personal loans.
3. Eligibility: You will find it quite easy to avail a Loan against property since Loan against property is a secured loan. As long as you have all your documents proving ownership of the property, you can pledge it to your bank to avail a loan. Some of the general eligibility criteria can be:
Nationality: Individuals who are residents of India/NRIs holding an Indian passport.
Age: 21 years and above.
Income:
For resident Indian:
Salaried Persons: Minimum gross monthly salary ₹10,000/-
Others: Minimum Annual gross income ₹1,20,000/-
NRIs:
Salaried Person: Minimum gross monthly salary ₹1 lakh.
Others: Minimum Annual gross income of ₹12 lakh.
However, the eligibility criteria are subject to policies of the bank lending the loan amount and can vary accordingly.
4. Ownership: Even after pledging your property there is no transfer of ownership of the same. The property is still yours, and it will only be held as collateral until your loan has been repaid in full. You can continue to use the property while it serves as a mortgaged property for your loan. This is the best part about mortgaging the property for a loan and you also don’t lose the ownership of your property even after you mortgage your property.
Availing Loan against property is a great idea to meet business/professional needs, House repair, House renovation, development of property and also for consumption purposes. Moreover, compared to other loan options, Loan against property comes with a lot of benefits like lower interest rate, longer tenure, continued ownership of property etc. Check out this loan offered by Karnataka Bank for more information. Thus loan against property is one of the best options to fund financial requirements and allows the borrower to make best use of their property.
