Loan Against Property – What You Should Know

Posted by Rudra Raghavan on December 10th, 2019

Loan against property opens doors to immediate funds by assigning your property as collateral. An extended repayment period and low-interest rates make it a popular loan option.

Suraj Gupta, a self-employed businessperson, recently marked his company’s 15th anniversary and now wants to take his business to another level. While he had allocated funds towards this business development plan, due to an emergency, the funds had to be used elsewhere. Instead of delaying the project and losing the drive, he thought of seeking an unsecured loan and was offered high-interest rates. On the advice of his friend, he kept is house as collateral and use it as a security and get a loan against property.

As the name indicates, loan against property is a secured loan that is offered by mortgaging a self-owned property - residential or commercial with the housing finance companies. Read this article to know more about this loan that has become a popular financing option for many, due to benefits it offers.

High loan amount

Subject to the mortgage providers policies, you can avail a loan up to 60 per cent of the market value of the owned property. Additionally, you can take advantage of the relatively long repayment tenure, up to 15 years by ensuring that you can fulfil the monthly repayment instalment.

Multi-purpose

The lender does not limit the use of the loan given. It can be used for multiple reasons right from meeting the expenses of a wedding to financing business to expansion plans to taking out a loan to meeting healthcare costs to acquiring property or an asset which may not be eligible for a credit in its capability.

Loan for all

Everyone can apply for the credit, be it salaried, or self-employed professionals and business people.

Documentation and processing

Compared to other loans, loan against property has negligible documentation requirements and gets instantly disbursed.

Essential loan features

Eligibility

Compared to unsecured loans in which your current income will decide the loan amount, in case of loan against property, the current property value along with income will determine the available loan amount. Besides, your age and past credit record will also influence the loan amount and repayment conditions.

Documentation

Besides the application form, identity, address and income proofs, you need to submit the ownership papers along with a property appraisal report. Keep in mind, declare the right information as the housing finance companies authenticate all the information provided.

Loan processing

On authentication of all information, you will able to do the repayment commitment, and the lender will sort out your loan application. A field visit is done to assess the property to be placed as security.

Costs

Over and above the rate of interest charged on loan, depending upon the lender, there may be a processing charge, loan stamp duty, and other such costs.

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Rudra Raghavan

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Rudra Raghavan
Joined: April 16th, 2019
Articles Posted: 10

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