There are a lot of things that happen in life. Some are expected and some are unexpected, for many such situations you need lots of money. Have you ever given a thought “where would you get the money from?” in emergency situations. There are a lot of ways to get the money from : such as borrowing from family and friends and also taking a loan. There are a lot of loan options which are available to cater all your needs. Each loan is designed to cater your specific needs and has its own perks.
One of those loans is a loan against property. It is one of the secured loans available in the market. As the name implies, a loan is disbursed against the property where your property is kept as collateral. The loan’s amount is decided on the property’s value and usually the loan disbursed is 40% to 60% of the value. The interest rate is also low as compared to other loans but will be relatively higher than home loan interest rates.
Should you take a loan against property?
A loan against property is the best option available in the financial market. This loan is especially beneficial for business personals. As a business owner, you may need money from time to time as working capital and a lot of times you run out of money. With the help of such loan, the entrepreneur can keep his property as collateral and get the loan money for the smooth running of process. The entrepreneur can then repay the amount and get his property back from the lender. Some lenders also give you an overdraft facility on your existing loan against property, but with a bit higher interest rates.
What are the benefits of loan against property?
Easy to avail
The processing of such loans is quick. You just have to be a salaried individual, a self-employed professional who have the property registered on their name. The property can be a land, residential complex or a commercial complex. After personal loan and gold loan it is one of the quickest loans that can be availed. There is a small processing fee involved in the loan process, that depends from lender to lender.
Lower interest rates
This loan comes with a low bracket of interest rates as compared to other loans available. Usually, lenders charge anything between 10% to 13% depending on your credit score. There are two types of interest rates to choose from, fixed interest rate and adjustable rate.
As compared to other loans, you can get high tenure for your loan. Usually, other loans have tenure term of 7 years maximum, in loan against property you can go till maximum fifteen years. This gives you an opportunity to pay the loan with ease without having money crunch.
When you have ample number of time and space to repay your loan, obviously the monthly installments will be less.
Use it as you wish
You can use this loan amount for anything such as home renovation, child’s wedding, etc. It is just like a personal loan.
The value of your property always gets appreciated from time to time, so does your incomes and gains. If by any chance you need a top up loan on the same loan account, you can easily get a loan with almost zero hassles. Some lenders keep a pre approved top up available towards your loan account which you can avail as per your need. This facility is only available to individuals who make all their payments on time and have an excellent cibil core. Individuals with low cibil score do not get refinancing option.
The moment you take a loan for the property, the property is usually goes to borrower’s ownership. If by any chance you fail to make the payments on time, the property can be sold by the lender to settle the debt.
Every loan has its pros and cons, but a loan is a loan. If not paid back with integrity it will create a lot of problems to your financial and personal life.
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