Did you know that your property has hidden value that can be unlocked? Or that, depending upon your present age and credit profile, you can sometimes secure a loan against property for a maximum tenure of 30 years?
Loan against Property is an easy and economical way to bridge any financial need - business expansion; or meet a personal requirement such as education for a son, daughter, self or spouse; a child’s marriage; foreign travel; medical expenses; buying high cost consumer durables or even refurnishing or renovating your home. Known as mortgage loans, a loan against property is the perfect way to unlock the value of your property. This loan is available at a reasonable rate and can be repaid comfortably over as many as 15 years, or longer.
LAP is available to both salaried and self-employed persons and against commercial as well as, residential property. The top feature is you don’t have to make a distress sale, only the papers are pledged to the bank to raise capital. If you repay the loan on schedule, you get it back, intact.
You can use this simple Creditfina tool to compare the specifics of loan against property (LAP) products offered by a slew of banks in India
Loan against property is a most cost-effective loan product compared to others, mainly because you are offering collateral in the form of land. Loans issued against shares and jewellery are also costlier.
LAP is a sensible route to take if you have some immediate fund requirement. The only condition is that the property you are pledging to the bank must have a clear title (in your name), the ownership is non-disputed and it must not be pre-mortgaged to another bank.
LAP for business purposes is usually availed by small and medium-scale manufacturers or traders to meet working capital needs and these products are offered by banks (national and multinational) and NBFCs. The banks rates of interest would always by lower than that charged by NBFCs. These business loans against property are generally taken for the purpose of working capital needs of the business. LAP can also be taken to meet capital expenditures such as plant construction or acquisition of new machinery. Sometimes, it’s also used to retire a more expensive loan.
Do you have a constructed property (house) or a plot (not agricultural land) that can be mortgaged to raise money to meet a personal or business emergency? Stumped by the bankers money-jargon? Fret not. Creditfina consultants can demystify the process and furnish instant quotes from at least three-four lenders to compare and make up your mind about which lender to go with. As mentioned before, interest rates fluctuate between banks and every rupee saved is a rupee earned.
Loan against property is a secured loan. The bank that offers LAP will evaluate the wroth of your property before loan sanctioning. Eventually, the sanctioned amount depends on your income, occupation, credit history and the current value of your property.
The documents required while applying for loan against property are similar to those for Home Loans except for the bank’s instance that the property be registered in the borrower’s name. The lender may also ask for a declaration that the property has a clear title and is free of all litigations. Finally, the bank would need a third party valuation of your property.
Takes near about the same time as a Home Loan disbursement.