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. It may be personal borrowing from family or friends or availing of loan products from financial institutions. There are several types of loans that these financial institutions offer. It can be a secured loan or an unsecured loan as per requirement.
As far as the security for a loan is concerned, you can avail Loan Against Property (LAP). There are no specific property types for LAP as such. You could get it on your residential property or avail of a loan against commercial property. You can also benefit from an online LAP application from the comfort of your home. All you need to do is submit the loan against property required documents to complete the procedure and avail of the loan.
The following points help us understand the significance of Loans Against Property –
Being a secured loan, the lenders' risk factor is negligible; hence, the LAP Interest rate is lower than other loans. This can be considered one of the key advantages of a LAP. Furthermore, since you get a lower interest rate, it results in lower EMIs, and thus it is pocket friendly.
Even if you have mortgaged your property for a loan to a bank, the possession remains with you only. You can continue using the property even when repaying your loan. The non-transfer of ownership and possession can be the best part of this loan. You can avail loan by mortgaging different property types for LAP, like self-occupied/rented-out property. You can avail of a loan against commercial property or even a residential property.
LAP offers you the advantage of partial disbursement of the loan, where you can receive a part of your loan amount and hold the remaining amount for a further stage. This facility is particularly beneficial if you have taken a loan for construction purposes. Moreover, you can avail of disbursement of the sanctioned amount in multiple tranches as required by paying interest only on the disbursed amount.
Once you complete your online LAP application and avail loan after sanction, an extended repayment tenure will be provided to you, unlike unsecured loans, where you get a shorter repayment tenure. Thus, LAP is a lucrative option since it allows lower interest rates and long repayment tenures. Moreover, long repayment tenure distributes the amount repaid in small EMIs.
You can manage your big-ticket expenses with the help of a LAP for your individual and business needs. The higher loan amount is because it’s a secured loan and offers finance up to 75% – 100% of the property's market value. In addition, being a collateral-based loan, it provides longer tenures and lower interest rates.
When you file an online LAP application and submit all the loans against property required documents, consider the following essential things –
1) Valuation of the Property –
Different property types for LAP can be mortgaged with the lending institution to avail LAP. It will evaluate the market value of your property based on the current market rates. The lender can sanction the loan amount up to 70-80% of the value of your property based on valuation and submission of proper documents. Therefore, the value of your property may differ from lender to lender.
2) Rate of Interest –
Although the rate of interest for LAP is much lesser as compared to Personal Loans, it is always better to do market research to compare interest rates. In addition, different lending institutions charge different interest rates, so do not rush into the process of availing of a quick loan. For example, the interest rate will differ for loan against commercial property with different lenders.
3) Repayment Tenure for the Loan –
The lenders provide longer tenure to the borrowers for the repayment of LAP. The loan repayment tenure usually differs from lender to lender. Some lenders offer LAP for up to 15 years. Being a borrower, you have to maintain a balance between tenure and EMIs. The compounding factor comes into the picture of floating interest rates, which might affect your EMIs if you have a longer loan tenure.
4) Loan Processing Fees –
The lending institutions charge the processing fees as per their terms and conditions. For example, it may range from 0.5% to 2% of your sanctioned loan amount or a minimum/maximum fix-cap amount. Thus, you should not be decided solely based on interest rates. Instead, it’s better to consider processing fees charged while availing of a LAP.
5) Ownership of the Property –
Various property types for LAP are provided as security, the ownership of which should be clear. The lending institutions can reject your loan application if the property you are pledging with them is disputed or its documents are inconsistent and incomplete. For example, in the case of a loan against commercial property, all the necessary documents must be available to you as a sole owner. If there are joint owners, consent is a must for availing loan against that property.
A Loan Against Property is the best option for you as a property owner to cater to your financial needs. You only need a lender who offers the loan product that suits your needs and is trustworthy. Poonawalla Fincorp strives to understand the requirements of its clients and offers them the best value and benefits. Explore the features and benefits of Poonawalla Fincorp loan against property offerings. For personalized assistance with your loan application, feel free to contact our representatives.
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.
Availing a personal loan might seem challenging due to stricter underwriting policy by lenders because of the unsecured nature of the product and the possibility of future Covid-19 waves.
Life is uncertain and, people have responsibilities. Whether you are planning a wedding for a loved one, paying for the education of your child, engaged in home renovation, or dreaming of expand your business, you need readily available funds.
Dont jump the gun, remains the wise phrase which needs to be kept in mind while availing a loan against property (LAP).