A smart step to fulfill your financial goals: Loan against property

Money is required for every walk of life. You may never know when financial uncertainties may grapple you. At this point of time, arranging money becomes very difficult. Traditional finances or personal loans come at an extremely high rate of interest and stringent payment measures. The best way to fulfill your financial goals would be availing a Loan against property that offers money to a borrower only when a property is kept as a security. Loan against property is a secure way to fund your personal needs such as business expansion, education/marriage expenses, and purchase of a bigger house, medical treatment or other financial requirements. Placing a property as security to get the funding is a smart step.

One of the important point that customer should bear is that with a Loan against property, you’re not selling your property to the loan provider. The property is just kept as a security to cover the risk the provider is running by lending you the money. In case, you’re unable to pay back the loan; they provide may seize the property. Also, the borrower can sell the property and pay back the loan amount.
In today’s high inflation times, LAP is a much affordable option as compared to a personal loan or traditional finance. The fact that your property is kept mortgaged helps the borrower build trust with lenders. Therefore, these loans come at extremely affordable interest rates and flexible repayment options. To avail a LAP you will need to keep your commercial or residential property as a security. People residing in co-operative society can also place their residence as security. Each bank or finance company has a different rate of interest to levy followed by processing fees, pre or post penalty charges, etc. It is provided at a certain percentage of your property’s market value. It may usually stand around 40% and 60% of your property value in the market. Thus, these kinds of loans help you leverage the economic worth of your home along with continuing to enjoy occupancy of the same so that you get immediate finance to meet a variety of personal and business needs.

The value of your property is evaluated on the basis of the current real estate market conditions and any existing loan on the property being used as collateral and other factors. Banks or finance companies offer the borrower tenure of around 5 to 10 years to repay the loan. Some leading private sector banks in India offer residential property loan at an interest rate as low as 10.60 to 12.60% with a mere processing fee of just 1.25% on the principal amount. You can also avail loan for a commercial property with interest rates as low as 11.10 to 12.60%. These loans come at adjustable (floating) rates.

With the emergence of internet-based facilities, gone are the days when people use to visit banks, fill up forms, get copies attested and submit them for housing finance. With online services you can download the relevant form, attached a scanned copy of the documents and submit online for approvals. The bank will check all the relevant documents related such as the title of your property, like electricity and telephone bills, for residence proof, Identity and residency proof like your passport, PAN card, or voter ID card, if you’re employed, bank statements for the past 6 months, last 3 month salary slips and form 16 & IT returns, and if you’re self-employed, they require your financial statements for the past 2 years, passport size photograph of all the applicants / co-applicants, last 6 months’ bank statements showing repayment of any ongoing loans, etc. The minimum age at which you can borrow a Loan against property is usually 24 years, and the maximum age for an employed person is 60, and a self-employed individual is 65.