What is loan against property and what are its requirement.
Posted by Anurag Mishra on June 24th, 2017
The loan against property helps you to get funding to meet varied business and personal requirements. It generally gets used for business expansions, higher education, wedding expenses, buying machinery, closing off high cost loans
Advantages of Loan against Property
Unlock the assets potential - One can easily generate funds by unlocking the potential of his asset through loan against property and continue to retain the ownership as well
Low interest rate Get funding at affordable interest rates. The LAP comes at a far lower rate of interest than a personal or a business loan
High value loans get upto 70% of the property value as loan amount
Credit Score and Loan against Property
Current credit health of borrower impacts the loan approval to a large extent. The loan application may just be out rightly rejected in case of a bad or poor credit health. In case of a low credit score, the borrower may face constraint of not being able to unlock the potential of his property. In normal course, the approval amount can range anything between 50% - 60% of the current market value, however in case of low credit score; the underwriter may decide to extend a lower value.
The borrower may also be required to pay a higher rate of interest than what gets charged in normal course. This can lead to a much higher EMI getting paid every month and lead to financial loss.
The eligibility of a loan against property depends upon various factors including the following important ones:
1. Income of applicant
2. Credit health of applicant
3. Property type
4. Property value
The lender would need the income documents and regular KYC documents (Photo ID proof and address proof) apart from the property papers that will get mortgaged with the lender and shall be returned post repayment of complete loan amount.
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About the AuthorAnurag Mishra
Joined: December 13th, 2016
Articles Posted: 108
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