Loan against property helps in getting immediate access to funds by placing your property as collateral. It’s a long repayment term with a low-interest rate that makes it a popular choice.
Loan against property can be gained by mortgaging the personal or commercial property with the lender.
Whether it is marriage, sudden medical emergency or for any business activity, the loan against property will help borrowers in meeting their desired goals with convenience. The mortgage finance industry usually provides loan against both residential as well as commercial properties.
Below are the reasons why the loan against property has emerged as a popular funding option:
Secure high loan amount with extended repayment tenure
You can secure a high amount of loan against your property and take advantage of long repayment schedule by repaying the loan on a monthly basis. It helps in reducing additional strain on you.
Multipurpose use of the loan
The loan amount can be used as per the requirement of the borrower. The purpose can be for personal use like marriage expenses or for setting up business or business expansion. You can also buy a new property from the loan amount.
Loan for business and salaried person
Loan against land can be used by both a business professional and a salaried person. There are no restrictions as such.
Here is a list of questions asked related to loan against property?
How does the lender decide on the amount of loan?
Firstly the lender will look into your repayment capacity. The loan amount is also calculated after taking into consideration your income, age, qualifications, assets, liabilities, savings history etc.
Is Co-applicant applicable on Loan against property?
You can apply on a co-applicant basis as per your convenience. The Co-Applicant can be your spouses, which is very common apart from children’s or parents. If your credit score is low, then it is better to apply with a co-applicant. Be it new home loan or property mortgage loan – the loan is usually disbursed in full. But you can also get the loan in suitable instalments.
Is it possible to prepay the loan amount?
Before choosing a lender, do check whether they allow prepayment of loans or not. If you have excess funds in the later stage, you can repay the loan before the tenure completion.
What will be the rate of interest and how it is calculated?
Rate of interest is calculated on a daily reducing balance. The monthly EMI will be much less compared to the rate of interest.
What will be the tenure of the loan?
The property mortgage loan is generally given on a tenure of 15 years subject to the condition. It does not exceed your retirement age. However, the mandate of loan against property can be flexible.
What will be the processing fees for such a loan?
The processing fee for a loan against any property varies from bank to bank. So always choose a financial institution or bank which provides mortgage loan against property with a processing fee.