Loan against Property: Things You Should Know
You can at any moment of life fall in the need for a huge amount of money. It could be for your child’s further studies or your daughter’s wedding. The reasons are many. However, there is a loan for every reason. You can either apply for a personal loan or loan against property.
What is loan against property (LAP)?
As the name suggests, loan against property is where the property is used as a mortgage. The borrower is lended money equivalent to a certain percentage of the property’s market value; usually it is about 40-60% of the property value.
Loan against property belongs to the secured loan category. The borrower receives the loan by using the property as security.
The various purposes you can apply for Loan Against Property
Loan against property can be taken for any urgent financial crunch. You can apply for Loan Against Property for any of the following reasons :
- Funding your child’s further education.
- Business expansion plans
- Funding your dream vacation
- Funding your son or daughter’s wedding
- For any expensive medical emergency
What kind of property can be used to apply for LAP?
Loan against property can be applied against a self-owned or rented property. It can be a house or a plot as well.
Rate of interest for loan against property
The rate of interest for loan against property can range anywhere from 12 to 15.75%, with a tenure up to 15 years.
Eligibility criteria for loan against property
The eligibility for loan against property differs from bank to bank. However, below mentioned are some of the common factors taken into account when considering loan against property.
- Your income, savings and debt obligations
- Value of the property you shall put up for mortgage
- Your credit history
So it is always a best option to consider loan against property when there is time constraint and urgent requirement of capital.