Whenever we face a financial emergency, the first thing that comes to our mind is applying for a loan. By taking a loan from a lender, we can access urgent finances and meet our requirements. However, choosing the right loan for our needs can sometimes become an arduous task with several types of loans available in the market.
While loans like home loans, car loans, business loans, etc., are meant to provide financing for specific purposes, they cannot help you tackle a financial emergency or an urgent monetary requirement. In such cases, you can avail of a multi-purpose loan, such as a personal loan or a loan against property. A Personal Loan is an unsecured loan, whereas a loan against property is secured.
In this article, we will discuss whether it’s a good idea to opt for a loan against property and the benefits of doing so. First, let’s tell you what a loan against property is.
A loan against property is a secured loan that the lender disburses after keeping a legally owned property of the borrower as security or collateral. It can be a piece of land, a self-occupied or rented house, or self-owned commercial premises.
It needs to be noted here that the borrower remains the rightful owner of the mortgaged property. It only remains as collateral with the lender until they have repaid the entire loan amount.
A loan against property can be a good alternative to unsecured personal loans since it has no end-use restriction. It means that it can be used for any purpose, ranging from tackling a medical emergency to paying for higher education to renovating a home.
When it comes to getting a multi-purpose loan, you have two choices – a personal loan or a loan against property. While both have some merits and demerits, the latter can be more useful when you need a high amount of financing. Let’s look at some essential features of LAP that make it a better choice:
Now that you know the features and benefits of availing of a loan against property, let’s talk about the factors that you should keep in your mind while applying for it:
So, these are the features that make LAPs a better choice than unsecured loans. You can avail of a loan against property and tackle your different financial requirements without any hassles. However, it’s crucial to keep the factors affectingon LAP in your mind while making a decision. If you default on your loan, you can lose your property to the lender.
Hence, it’s better to borrow a loan against property only if you are convinced that you can repay it in time. If you want to go for a less risky financing option, you can opt for a personal loan.
With Poonawalla Fincorp, you can avail of a gamut of loans, including personal loan, home loan, and loan against property. Browse through our website and choose the right financing option for yourself.
A Loan Against Property can act as a financial cushion to support your diverse monetary requirements.
A Loan Against Property (LAP) is a low-cost way to ensure funds are available when needed. This is a secured loan, and you mortgage your property for the loan.
During financial emergencies, people look for borrowing a loan to cater to their urgent bills. With various options in the market, borrowers can choose from a variety of credit options.
Your property is a powerful asset that can be leveraged for big-ticket expenses like business expansion, weddings, home renovations, etc. Loan Against Property (LAP) is the right choice if you require additional funds without impacting your savings.
We all know that the COVID-19 pandemic has affected most of the population physically, mentally, and financially. The financial crunch experienced by many people was too difficult to handle without external support.