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Things You Must Know about Loan Against Property

An advance against property (LAP) is precisely what the name infers – a credit given or dispensed against the home loan of property. The advance is given as a specific rate of the property’s reasonable worth, ordinarily around 40 for every penny to 60 for each penny.

Credit against property has a place with the secured advance classification where the borrower gives a certification by utilizing his property as security.LAP is really like individual advance; the main contrast being you put a property possessed by you as guarantee against the advance. This property may be seized on the off chance that you default on the credit. As there is guarantee against the credit, banks feel more secure in loaning and thus the borrower makes them deal control when contrasted with individual advances which is unsecured.

What purposes can I take a loan against property for?

Loan against Property can be taken for following purposes:

  • Expanding your business
  • Getting your son/daughter married
  • Sending your son/daughter for higher studies abroad
  • Funding your dream vacation
  • Funding medical treatments

When to take a loan against property?

  • A loan against property can be taken for various reasons, including plans to expand business, plans for a Trip abroad or marriage of a son or daughter. While there are loans like gold loans that could also serve as a hypothecated asset, Indians hardly prefer selling their gold, due to emotional attachment, which is why one could prefer a loan against property.
  • Also, loan against property is much cheaper when compared to personal or other loans, which is why it is more preferable.

It’s easier to get a loan against property, then a host of other loans. Also, Interest rates are far more attractive than other forms of loans, like personal loans. Also, the property continues to be in the name of the owner and the asset can be put to a more productive use.

Loans against property is yet to catch up in India, but it’s something that can certainly be considered.

This gives following advantages:

  • Person can generate funds by unlocking the property value along with the benefit of staying in his home
  • Can satisfy his need for immediate personal expenses like: New Business funding or Business Expansion etc.
  • Indiabulls LAP has reasonable interest rates to accommodate your emergencies.

Important Features of LAP

Few features related to LAP which makes this option attractive:

  1. Lower limit starts from 2 lakh and there is no upper cap
  2. Can opt for both floating and fixed interest rates
  3. Longer tenure of repayment
  4. Cheaper interest rates
  5. Loan up to 40 to 70% of property value
  6. Simple processing

Why you should opt for LAP?

There are three basic reasons which make this option worth consideration-

1. Lower Interest Rate

As it’s a secured loan; you get a bargain of 4 to 5% on the interest Rate you pay as compared to personal loan. The Interest rate ranges from 11 to 14%. This lower interest rate gives a clear edge to it over personal loan where you pay interest in the range of 16 to 20%.

2. Longer Tenure of Repayment

This feature further reduces your EMI burden as you can get LAP up to 10 to15 years. When your cash flow is not steady this feature makes the option even more attractive.

3. Ideal Use of Property

In case you own a property and not using it, LAP gives an opportunity of optimum utilization. You do not lose the ownership and get Funds at cheaper rates at your disposal.

A loan against property is one of the best ways to raise money. The only disadvantage of such a loan is that if the borrower is not able to pay the loan fully, the bank or the financial institution can take possession of the mortgaged property. Base your decision on your repaying capabilities.