It is hard to predict when you might be in need of funds. You might need them to take care of your emergency needs or to make your dreams come true. Now, whatever the situation may be, one of the quickest ways to get your hands on some funds is by opting for a loan against property online. Wondering what it is and how different it is from other forms of loans? Continue reading to find out.
What is a Loan Against Property
A loan against property (LAP) is a method through which you can avail a loan from a financial institution by mortgaging a property that you own. The property can be anything from a piece of land to an apartment in a building.
Since you’re essentially pledging an asset with the lender, LAP is considered a secured loan, unlike several other forms of loans. When you take out a loan against your property, the lender first assesses its value and grants you a loan based on it.
As with any other loans, you will have to make principal and interest payments in the form of monthly EMIs for a predetermined tenure. Till the time you repay the loan in full, along with the principal and interest, the property will be held as collateral by the lender.
Features and Benefits of Loan Against Property
Now that you’re aware of what a loan against property is, let’s take a look at the features and benefits that it offers.
- Quick Application and Approval Process
One of the many advantages of LAP is that you can apply for a loan against property online within a few minutes. All you need to do is fill out and submit an online application form and the relevant documents. Thanks to this, even the approvals are fast-tracked and take only a few days.
- High Loan Amount and Loan to Value (Ltv) Ratio
The Loan to Value (LTV) ratio denotes the amount of loan that you’re eligible to get against your property. Depending on the lender, you can get anywhere between 75% to 90% of the property’s current market value as a loan. Some lenders even offer high loan amounts of up to ₹5 Crores.
- Long Repayment Tenures
Since you’re effectively offering your property as collateral, lenders will generally be willing to offer long repayment tenures. You can even opt for tenures to the extent of up to 25 years depending on the amount of loan that you’re availing.
- Relaxed Eligibility Criteria and Documentation
The loan against property eligibility criteria usually tends to be quite relaxed. Lenders usually only require you to satisfy a set of few basic criteria to be able to apply for the loan. Similarly, the list of documents you must submit as part of the application process is also minimal.
- Low-Interest Rates
The interest rates on loans against property are usually lower than many other forms of loans like personal loans. The primary reason for such low rates has to do with the fact that the loan is essentially secured against your property. These low-interest rates help reduce your overall financial burden.
Loan Against Property Eligibility Criteria
To be able to apply for a loan against property, lenders usually require you to satisfy a set of eligibility criteria. Read on to get a general idea of the kind of criteria that you may have to satisfy to apply for such a loan.
- You must be between 25 to 70 years of age.
- You must either be a salaried or self-employed individual with a steady income.
- You must be a permanent resident of India.
The above-mentioned loan against property eligibility criteria may vary depending on the lender you opt for. So, this is something that you should keep in mind when applying for such loans.
With so many features and benefits, a loan against property is easily one of the best ways to get access to funds. Another major advantage that you get to enjoy by opting for a LAP is that there’s absolutely no restriction on the usage of funds. Be it for funding your child’s education or for a vacation, you can use the loan amount to fulfill all your dreams, no matter what they may be.