The existing credit market offers borrowers numerous credit options. While some credit alternatives can be employed for a particular purpose, such as an education loan or home loan, other loans arrive with no usage limitation.
These loans with no limitation are generally known as multipurpose loans. In addition, even when a personal loan is the most favored multipurpose loan in recent times, they are usually deemed an expensive credit option.
Hence one of the most promising alternatives for a personal loan is a Loan Against Property (LAP). A loan against property is a quick processing, multipurpose, and much more affordable credit option than a personal loan that you can use to raise money by putting your residential or commercial property as collateral.
Keep reading below to learn more about a loan against property and its prominent advantages.
What Does a Loan Against Property Entail?
A loan against property, popularly known as a mortgage loan, refers to a credit offered by a bank or financial institution on any commercial or residential real estate property kept as collateral.
A financial establishment or bank decides the final loan amount and the loan against property interest rates after assessing the existing market value of your real estate property.
Moreover, the banks or financial establishments typically present approximately 70% of the property market value as a credit under secured loans, delivering multiple benefits. Here are some reasons you must choose a loan against property over a personal loan or other credit option.
- The odds of receiving approval on a loan against property are far more optimistic than any other credit option. Also, since the borrower usually keeps a real estate property as collateral, financial establishments and banks rest assured that the collateralized property can get used to repay the loan in case of a default from the borrower’s end.
- It can assist you in buying a new home or office or remodeling or repairing the current one.
- Borrowers can employ LAP for personal expenses such as paying for any foreign trip or business purposes like working capital requirements or expanding a factory unit.
Understanding the Prominent Advantages of Availing a Loan Against Property
Below are some of the primary advantages of a loan against property.
Easy Approval Procedure
Among numerous other advantages of availing of a loan against property, quick and easy approval is one of the notable benefits. Obtaining a loan against property is more effortless than applying for and receiving an unsecured personal loan.
However, the only thing you must check before applying for a loan against property is that the residential or commercial property title remains free from mortgage litigations.
Flexible Loan Term
The credit duration of a loan against property is relatively lengthy.
The term of a loan against property can be extended to 15 to 20 years, whereas the maximum term of a personal loan is five years. This longer duration divides the repayment and reduces the financial burden on the borrower.
Loan Pre-Closure
The pre-closure of a loan against property (LAP) is normally free from any liens or fines. In addition, you can close a loan against a property account by paying the overdue sum sooner than the duration determined.
However, one factor to consider is that if your loan remains on a set interest rate, you must pay a nominal sum known as prepayment charges.
What Are the Set Criteria to Obtain a Loan Against Property?
While every bank maintains distinct criteria when presenting a loan against property, the preceding provisions remain similar. The eligibility criteria a borrower must fulfill to receive a loan against property are as follows:
- The loan applicant must hold Indian citizenship
- When submitting the loan against property application, the borrower must be 21 years of age, not more than 60 years in case of a salaried person, and exceeding 70 years in case the borrower remains self-employed
- A credit history with a minimum score of 750+
Documents required during a Loan Against Property Application
Below are some necessary loan against property documents you must submit along with the duly signed and filled application form.
- Passport size photographs
- Valid Property Deed
- Photo Identity Proof
- Past six month’s bank statement
- Form 16 and the last three months’ pay slip, in case the borrower is salaried
These loan against property documents necessary as above we mentioned
Conclusion
Are you planning to take a loan against property to fulfill your financial obligations? Look no further than the comprehensive loan against property offered by PNB Housing. For more details, visit our official website.
