Another name of Mortgage loan is Loan against Property(LAP). If you require funds for meeting personal and business needs, you can avail a Loan against Property. A Loan against Property is a secured loan. The interest rate on a LAP is lower in comparison to unsecured loans and tenure of the Loan against Property goes up to 15 years. Both salaried and self-employed individuals can avail LAP. There are many banks and NBFCs offering a Loan against Property. You can take a loan against property for both businesses as well as personal needs.
Some of the basic need for which an individual take a loan against property :
1. Business purpose:
An individual can take a loan against property for starting a new business, a business loan is not provided for the purpose of starting a new business, it is provided on behalf of an existing buiness. For meeting requirement of fund for the start-up of a new business, you can go for a loan against property. It can be also used to purchase inventory, buy machinery and equipments and to meet working capital expenses of the business. LAP is an unsecured loan which an individual can easily avail against his property.
2. Medical Emergency
Life is uncertain, you never know when medical emergencies may arise. Loan against property helps to meet your requirements of the fund when there is an emergency. Medical bills run in thousands and lakhs and to pay such a huge amount of bills, needs for funds arises. LAP helps to overcome these unforeseen medical emergencies.
3. Wedding
Marriage marks one of the most joyful and memorable events for any individual. While marriage spends vary among people based on their tastes and spending capacity, most weddings overshoot the planned budget. A loan against property helps to overcome the requirement of a fund which arises at the time of marriage.
4. Study in abroad
Nowadays, education has become very expensive. Some students want to go abroad for higher studies and it requires finance in a large amount. A loan against property helps an individual to pay off these education fees and dream of getting a degree from foreign universities comes true with the help of a loan against property
Other benefits of loan against property are :
Both Salaried and Self-employed can avail
A business loan is provided to the businessman and personal loan is provided to the salaried, but loan against property is the loan which can be avail by both Salaried and Self employed against property.
Investment
You can use the loan amount for investing in a stock market or in purchasing any other property. You can also buy a share, debenture etc.
Travel
With the amount of loan against property, you can full fill the dreams of traveling all over the world. A requirement of funds arises to purchase tickets, buy things or other travel expenses, all can be done with the help of loan against property.
Lower ROI
Generally, the rate of interest of loan against property is lower as compared to the other loans because LAP is a secured loan which is provided against a property.
Tenure
A loan against property is a secured loan, the tenure of the LAP goes up to 15 years. The loan tenure for the loan against property ranges from 3 years to 15 years.
Affordable EMI
Longer the loan tenure, lower the EMI and vice versa. As tenure is higher and the interest rate is lower on LAP compared to a personal loan or other loans, the EMI for LAP is affordable which an individual can pay it in equal monthly installments.
Eligibility criteria:
You are required to fulfill the following criteria in order to be eligible for a loan against property:
- Age: The applicant should be at least 18 years old at the time of application of the loan. Repayments are to be made before the age of
- Income: The applicants are required to have a net monthly income of Rs. 25,000 or more if they are salaried. For the same loan, Â Â Â self-employed individuals will need to have a net annual income of more than Rs. 3 lakhs.
- Business Stability: A self-employed person should be in business for a minimum of 5 years during which the business should be profitable.
- CIBIL score: A CIBIL score of 650 and above is considered good to avail a loan against property. A poor CIBIL score of less than 650 will lead to         rejection of your loan application.
- Property Value: The value of the property to be mortgaged is used to calculate maximum loan eligibility based on the maximum permissible LTV ratio which can range up to 60- 75% depending on the type of property.
- Property approval and documents: The builder and property against which you are taking the loan should be approved by the bank.
- Property approval and documents: The builder and property against which you are taking the loan should be approved by the bank.
Points to note:
- Property loans are not allowed to be used for home construction or purchase.
- Banks will take an end use undertaking on the loan against property and will also check the actual usage of the loan on a regular basis.
- Top up loan taken on existing loan against property customers can be used for purposes such as business expansion, education, medical expenses etc.
Conclusion: Above are the purposes for which an individual can avail loan against property. By using this you can use your funds in the best way. Also, make sure that you fulfil the eligibility criteria. You can apply for a loan against property by visiting the bank website or through an online aggregator.
