Loan Against Property – Know the Important Benefits
The present credit market offers you numerous credit options. Few of the credit options are to be used for particular purposes like home loans, car loans, and education loans, while other credit options come with zero-end usage restrictions. Such loans are known as multipurpose loans.
A personal loan is a credit option that is the most availed multipurpose credit option in the current scenario. However, you must never ever avoid the fact that a personal loan is a costly credit choice available in the market currently. A loan against property is one of the prudent alternatives to a personal loan. Moreover, as a loan against property is a secured loan option, besides offering a lower interest rate, this credit option may even not require you to provide your income proof if all your property documents and identification documents are apt. Yes, you read it right, a loan against property without income proof is available in the present-day market too. So, a loan against property is one of the best multipurpose loans, which comes with swift processing and is way cheaper than a personal loan. There are various advantages of loans against property and in this blog, we will discuss the different benefits in detail.
Simple approval procedure
Among various other advantages of a loan against property, easy loan approval is one of the important benefits you must note. Availing a loan against property credit option is way easier as compared to availing any unsecured personal loan. The only factor which you as an applicant of a loan against property must consider is that the title of the property must be free from any type of mortgage litigations.
End usage flexibility
Loan proceeds availed via the credit option – loan against property is thoroughly free from any kind of restriction on the end usage. You as a borrower can use your loan proceeds for any kind of purpose. May it be for pursuing higher studies, home renovation, medical expenditures, home construction and others. With a loan against property, you can meet all your monetary mismatches with ease.
Pocket friendly
A loan against property is one of the economical ways of opting for the required financial support. The interest rate on a loan against property is way cheaper as compared to the unsecured multipurpose loan. The LAP interest rate ranges anywhere between 9 per cent and 15 per cent per annum, while the personal loan may range anywhere from 12 and 24 per cent per annum.
Also Check: Loan Against Property Interest Rate
Flexible loan repayment tenure
Loan against property’s repayment tenure is very long. The loan against property repayment tenure may be stretched to 15 years, while the highest personal loan repayment tenure equals 5 years. A higher loan repayment tenure creates extremely less stress and financial pressure on you as a borrower of a loan against property.
Borrowing against distinct property types
To get a loan against a property, you can use different property types. You can mortgage your self-occupied home, commercial property or rented residential home or the piece of plot you own.
Pre-closure
Pre-closure of the loan against property is usually free from any fees or penalties. You can close your account for a loan against property by paying your outstanding proceeds on the loan faster than the decided loan repayment tenure. However, the point is to factor in that if your loan is based on a fixed interest rate, you might require paying a nominal proceed as prepayment fees.
Top up option
A loan against property is available with the top-up option. Just like any personal loan or home loan, you can avail a top-up loan on your existing loan against the property option. A top-up on the loan against property is offered by mortgaging the property that you put up for loan against property with minimal documentation work.
Minimal debt burden or stress
A loan against property’s debt burden is way lighter as compared to that of a personal loan. There are majorly 2 parameters, which make loan against property option a lighter and better debt, i.e., low rate of interest and higher repayment tenure. Both these parameters together make the loan against property’s EMI proceeds affordable; hence the stress and debt burden also are lighter.
Continuous ownership
Unlike other secured credit options like loan against security, gold loan, etc., the property ownership will remain with you. You can use the property for any purpose. No ownership authority or any changes are liable here in this case. The only parameter that the lender will hold is the mother deed custody and property’s sale deed till you make full repayment of the loan.
Optimum property use
A loan against property endows you with the best property value. It unlocks the actual property’s potential. Alongside, the general property use, it even allows you to get a lower rate of interest. A home, commercial building, land, or property are good security or collateral that allows you to avail a secured loan at a lower rate of interest. You as a borrower can retain the property ownership while taking up the loan against property.
Flexible loan proceeds
Loan proceeds, which you avail through the credit option of loan against property is based on the prevailing market price. You can get loan proceeds of as high as 70 per cent of the value of the property. The loan proceeds available to you may be as high as Rs 5 crore. With a loan against property, you can avail bigger loan proceeds in a stress-free and hassle-free way. The only thing that you as a borrower of loan against property must consider or note is that the land or property is mortgaged for the loan and failing to repay the loan might make you lose out on your property ownership. Thus, make sure to timely repay your loan proceeds on loan against property. Never ever default or forget about the due date. To remember or to keep note of the loan against property’s due date, you can set a reminder on your mobile phone Read more
