What are the Top Benefits of Loan Against Property
Posted by Bhavna Singhal on January 28th, 2020
There is a wide range of options for loans in the current market, among which the loan against property is an easier and more convenient option. Naturally, a property is used as the mortgage for this type of loan. The property can be self-owned, unused land or commercial land. The influencing factors in receiving a loan against property are applicants' income and market value of the property.
Top benefits of loan against property
Loan against property can be highly beneficial because of the following reasons-
Easy approval process
Getting approval for a loan against property is one of the easiest and convenient loan options available in the market. The bank’s' scrutiny process for a loan against property is not that high as opposed to the scrutiny process for any personal loan. The reason behind the simple policy for this kind of loan is that in case of missed payments, the bank can easily get back the loaned amount by auctioning the property.
The only requirement is a mortgage litigation free land.
Lower interest rates
The loan against property interest rates is comparatively low due to its secured nature. The credit profile and internal policies of the applicants and the banks will help to decide the interest rate. Nonetheless, the loan against property will be a cheaper option than personal loans. One can get up to 60% of the market value as a loan.
The repayment tenure of loan against property can go up to 10 or even 20 years, whereas the tenure of the personal loans goes up to 7 years. Therefore, the borrower gets more time to repay the loan taken against the property.
Short time tenure increases the Loan against property EMI and long-time tenure reduces it. In case of a loan against property, the longer tenure helps in reducing the EMI amount as well. Therefore, the borrower gets a longer time to repay the loaned amount. The loan against property is considered highly convenient because it doesn't put much financial burden on the borrower.
The best advantage of applying for a loan against property is that the borrower gets the required money and still gets to use the mortgaged property as per their requirement. The borrower does not lose ownership. The bank will hold the custody of the property until the borrower repays the loaned amount. However, the custody will go back to the owner as soon as the loan is repaid.
The pre-closure of a loan against property does not come with any charges. It means the borrower can close the loan by repaying the total amount of loaned money before the tenure ends. There may be some prepayment charges in case of fixed interest rates. Contrarily, no prepayment charges are needed for loans with floating interest rates.
Best use of a property
Loan against property enables borrowers to make the best use of their properties. The borrowers can use the property and get a loan against it at the same time. Thus, the hidden value of the property is evaluated.
One of the biggest advantages of the loan against property is the top-up facility. Similar to the personal loans, one can take a top-up loan on an existing loan. The process of applying for a top-up loan is simple and requires little paperwork.
Additional Reading:- Tips that you Cannot Avoid while Applying For a Loan Against Property
The loan taken against property can be used in anything. There are multiple banks providing loans against property. The interest rates, tenure, processing and prepayment fees of different loan options can be compared before choosing the bank. The above-mentioned benefits make a loan against property a go-to loan option for many.
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About the AuthorBhavna Singhal
Joined: June 5th, 2018
Articles Posted: 22
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