Should You or Should You Not Take a Loan Against Property?


Having a property of your own is one of the biggest assets in India. A major advantage of the property is that you can take a loan against it from a lender. But is a loan against property truly beneficial? Let us have a look at whether you should or shouldn’t prefer this type of loan.

If you own property in India, you can keep it as collateral and take a loan against it. Such types of loans are available on residential as well as commercial properties. The loan amount can be used for a number of reasons like funding your child’s education, funding medical emergencies, business expansion, and much more. Among the many benefits of owning property, borrowing money against it is surely an added advantage.

But is taking a loan on your property actually beneficial? Let us have a look at some of the ways in which this type of loan can benefit you.

  1. Better Interest Rate

As compared to a personal loan and many other types of loans, a loan against property is cheaper. This is because a personal loan is an unsecured type of loan while a loan taken against property is secured. You keep your property as security for the loan and lenders offer the loan at a cheaper rate as they are not required to carry the amount of risk that they are usually required to carry with an unsecured loan.

  1. Highly Flexible Repayment Duration

Even the repayment period for this type of loan is much longer than many other types of loan products. As lenders carry a lower risk for such a loan, they usually do not mind offering longer repayment period. In most cases, such loans are available for up to a period of 15 years while loans like personal loans are only available for up to 5 years using home loan calculator to calculate home loans emi and time duration.

  1. Higher Loan Amount

In most of the cases, you can borrow up to 60%-70% of the cost of the property you keep as collateral. With the cost of properties in millions in most metro cities, you can borrow a considerable amount of money with this loan. The amount is surely much higher than the amount you can borrow with other types of loan, and you get it at a cheaper rate.

  1. Affordable EMI

With longer repayment duration, even the EMI can easily fall up to a level that you are comfortable with. You get the facility to adjust the loan tenure to a period where the EMI amount based on the interest rate is easily affordable on a monthly basis. This can avoid problems like late payments which attract heavy penalties.

  1. Quicker Processing

With other types of unsecured loans, the lender is required to scrutinize your eligibility based on aspects like your salary, credit score, age, employment, etc. This makes the approval process long and tedious. But with a LAP, your property is kept as collateral and the lender is not required to be as stringent with the eligibility requirements, making the approval process quick and hassle-free.

Owing to the benefits mentioned above, you should surely look for this type of loan if you own property and want to take a loan. If handled carefully, these secured loans are one of the best financial products currently available on the market.