Here is everything you need to know about Loan against Property
Mortgage loans have always been the more reliable and productive financial resources, courtesy of the secured nature, and faster chances of approval. While there are home loans, reverse mortgages, and other secured loans where you need to put up something as collateral, nothing works better than a loan against property for securing immediate and sizable funds.
In the subsequent sections, we shall take discuss LAPs in detail while addressing every relevant aspect, starting from characteristics, terminologies, and the best lending options in play.
Nature of LAP
A loan against property is a straightforward and highly secure form of mortgage loan that allows you to get a sizable credit line by putting up the property as collateral. While the repayment procedure is initiated like any other loan, lenders keep the property as a guarantee in case repayment issues are encountered in the future.
LAPs do not have demanding eligibility criteria and you need to approach applications like any other loan. However, you need to produce every relevant property document followed by salary slips, identity proof, and address proof. Certain lenders also take your credit score and history into account before considering the LAP application.
Underrated LAP Features
While we shall discuss the relevant features as a part of a discussion regarding, benefits, here are some of the more underrated and often ignored attributes of a LAP:
- Flexible Disbursement
Loans against properties are flexible when disbursements are concerned. This means you can either choose to get paid at once or select an installment-based disbursement method, as per convenience.
- Seamless Loan Transfer
A good thing about this mortgage loan is that you can shift to another lender, in case you are getting a better interest rate and other perks on repayment. However, you need to take the penalties, overheads, and fresh loan processing charges into account before proceeding.
Benefits of a LAP
- Significant loan amount
A LAP is probably the most productive credit line for someone looking to get access to a decent sum of money. As is the case with lending against property, certain lenders end up offering loan amounts amounting to almost 60 percent of the existing property value. Therefore, if you are looking to addressa financial emergency, marriage, or planning to start a new business, nothing works better than a LAP, provided you have an unused property at your disposal.
- Seamless Repayment
With LAP, it is possible to repay the loan, as per your existing financial stead and preferences. For instance, if you are interested in prepaying, it is advisable to opt for a longer tenure, around 15 years, to minimize the short-term financial burden.
- Competitive Interest Rates
LAP loan interest rate is usually lower than that on personal and even business loans. As it is a secured loan, banks and other lenders are more reliant on offering extremely low-interest rates, provided your credit score is at par with the permissible standards.
- Multipurpose Loan
A good thing about loans against properties is that there are no usage restrictions, like that on business and education loans. Therefore, you can apply for a LAP and use the procured sum for financing a marriage or even attending to the higher educational requirements of the child.
- Easy processing
This form of the mortgage loan doesn’t require detailed documentation and you only need to stress upon the property documents. Besides, once the property is verified to be free of disputes, loan processing is easier than any other application. Not to mention the fact that LAPs have higher chances of getting approved.
How to choose the perfect lender?
To make the most of the mentioned benefits associated with a LAP it is necessary to select the lender with the utmost care. Here are some of the aspects that need to be checked before zeroing in on the preferred financial institution:
- Opt for the lender that support seamless applications, mostly initiated over online platforms
- Consider banks, NBFCs, and HFCs that offer a better percentage of loan on the existing property
- Select the lender that offers the lowest lap loan interest rate
- Consider services with minimal to no overhead or processing costs
- Opt for lenders that offer flexible repayment options
Getting financial support by putting up the property is a tried and tested method to achieve financial autonomy without having to worry about the intricate processes, credit score, chances of rejection, and even higher interest rates.