A personal loan is the most famous multipurpose loan taken by most of the people around you. However, this type of loan costs very high in terms of interest rates. Therefore, a better alternative to this is a loan against property (LAP). This too is a multipurpose yet fast processing and cheaper option.
This is your chance to know about the various benefits of a loan against property. Here are some benefits that LAP has to offer and will give you a clearer picture of the whole process.
Loan Tenure
You can fix the loan tenure of the loan against the property at your convenience. It can be stretched to as long as 15 years. On the other hand, the longest period of a personal loan can be 5 years only. Hence, the longer the loan tenure, lesser will be your financial pressure.
Approval process
The most prominent benefit of a loan against property is that it gets approved pretty easily and quickly. Since this loan is taken against your property, it is easy to approve as compared to any unsecured loan. However, you must remember that the property against which you are taking the loan should be free from any mortgage.
Loan Amount
The loan you receive depends upon the price of your property in the market. You can get a loan of up to 5 crores on your property as well. Thus, if you want a bigger amount, you should go for a loan against property. This is a very hassle-free way of getting a loan of as high as 70% value of your property. But know that your property will be mortgaged and if you are unable to repay the loan, then chances are that you might lose your property.
Best use of property
If you take the loan against property, then you are making the best decision when it comes to using your property most perfectly. With this, you can make general use of property, unlock its true potential as well as get the loan at a much lower interest rate. It is the best collateral for getting a secured loan.
Concept of continuous ownership
With a loan against property, the ownership of the property will remain with you only despite you being the borrower. You are allowed to use the property like before, without making any changes. However, this is not the case with other secured loans like a gold loan. The lender will have custody of the mother deed and sale deed only till the time you don’t pay back the loan.
Debt burden
The burden to pay back the debt in case of a loan against property is very less when compared to the personal loan. This is mainly due to two reasons, the first being the fact that the tenure of loan against property is long and it has a low-interest rate. These factors make the EMI amount small and your financial burden reduces. Therefore, a loan against property is the best option if you are thinking of a minimal debt burden.
Facility of pre-closure
Pre-closure in case of loan against property is free from any extra charges and no penalty fees are charged either. You can easily close your account any time after paying the remaining amount sooner than the decided date. However, if you have taken the loan on a fixed interest rate, then you might have to pay a nominal fee under prepayment charges.
Top-up of loan
You can easily top-up your existing loan against property. In this case, you can increase the amount to be loaned if you need some extra money as per your requirement. All this will be done by mortgaging the same property but the paperwork required will be very less. Thus, it will be easy for you to make use of this facility.
Using different property type
You can take the loan against any type of property like a commercial, residential or self-occupied one. The only condition for you to get the loan is that there shouldn’t be any pending mortgage on your property.
These are some points that make a loan against property the best option for you when it comes to taking a loan. This secured loan will be easy for you to pay back and at the same time, it will fulfil your requirement for money.