banner image how to borrow a loan against your home

How to Borrow A Loan Against Your Home?

January 19, 2024 • 290 views

Unlocking your home’s real value with a loan against home can turn out to be a great financial strategy to meet personal or business needs. The maximum loan-to-value (LTV) ratio for a loan against your home is 80% of its value. This means if your home is valued at Rs. 1 Crore, then you can get a loan up to Rs. 80 Lakh. Read on to learn about how you can use your home to get a loan.

What is a Loan Against Property?

A Loan Against Property is a type of secured loan that can be availed by using your property as collateral. It is also known as a Mortgage loan. The Loan Against Property interest rate starts at just 9% p.a. and its tenure could vary from 36 months to 180 months.

As it is a secured form of loan, the interest rates are low with longer loan tenure. Individual with urgent requirements of cash can apply for a Loan Against Property for an immediate solutions such as for meeting business needs, medical expenses, or education.

How to Get a Loan Against Your Home?

You can follow the steps mentioned below to get a loan against residential property:

  • Step 1: Open the application form by clicking on the ‘Apply Now’ button.
  • Step 2: Enter your details accurately on the application form and attach all the necessary documents.
  • Step 3: Click on ‘Submit’ to complete the application process. 

Benefits of Getting a Loan Against Your Home

Getting a secured loan like a loan against your home is easy and provides flexibility in terms of the repayment tenure when compared to unsecured loans. The below points will help you understand the benefits of a Loan Against Property:

1. Minimum Paperwork Needed

To avail a loan against home, you will need minimum paperwork. This is because it is a secured form of loan, thus you just need to present some essential personal and property documents, saving you time and effort.

2. Loan Processing is Easy and Quick

You can simply and quickly apply for a loan against your home online from the official website of the financial institution. This simplifies the process, saving you time and ensuring the completion of the application process from the comfort of your home.

3. Low Interest Rates

Loan Against Property is a secure form of loan, that allows institutions to sanction loans at lower rates, starting from 9% p.a. This ensures the EMIs are low so that you don’t feel financially burdened during credit repayment.

Drawbacks of Taking a Loan Against Residential Property

Like every financial tool, Loan Against Property also has its drawbacks. These include:

1. Loss of Property

In case of defaults while repayment, borrowers can lose the property that they pledged as collateral. This may happen to anyone because no one knows when a financial problem will arise.

2. Application Rejection

Generally, individuals apply for Loan Against Property for an urgent requirement of a lump sum amount. Thus, institutions thoroughly check the documents, and if there is any error, it may lead to rejection of your Loan Against Property application.

3. Floating Loan Against Property Interest Late

If a borrower opts for floating interest rates on a Loan Against Property, the interest rates increase as per fluctuations in the current market rate. The increase in interest rate eventually raises the EMI, creating unwanted high monthly instalments for every borrower.

Also Read - 6 Ways a Loan Against Property (LAP) Can Help You Make Use of Your Property

How Much Loan Amount Can You Get Against Your Home?

Getting a loan against your home will enable you to meet your urgent financial needs. Thus, it is important to know how much loan you will get against your home. To learn more, please refer to the below points:

  • You can get a loan amount between Rs. 51 Lakh to Rs. 5 Crore against your home.
  • The interest rate starts from just 9% per annum but could go higher.
  • You pay 3% extra interest per month for late EMI payments and a fine Rs. 1,000 in case of cheque bounce.

How Much CIBIL Score is Needed for a Mortgage Loan on a Home?

Financial institutions generally consider 700 or more as the ideal CIBIL score for sanctioning a loan against your home. However, if someone has a CIBIL score lower than 700, they can add a co-applicant and increase the down payment to improve their chances of getting a loan.

Also Read - Major factors to consider while applying for Loan Against Property

To Conclude

Applying for a mortgage loan to meet an urgent need for cash is quite common nowadays. While applying for a loan against home, you should never forget that it is a huge responsibility to repay the loan. Lastly, avoid defaults while repaying your loan in order to avoid unwanted situations.

Unlock your dreams by applying for a Loan Against Property from Poonawalla Fincorp.

Frequently Asked Questions

  • Why take a Loan Against Property?

Loan Against Property or LAP allows you to meet any urgent need for money as there is no end-use restriction. For example, you can pay medical expenses, expand your business, pay your child's education fees, etc.

  • What type of properties are eligible?

For availing a Loan Against Property, you can pledge any form of real estate as collateral. Real estate includes apartments, houses, flats, villas, shops, offices, etc. are all eligible.

  • What is the maximum tenure for a Loan Against Property?

You can opt for a maximum tenure of 180 months (15 years) to repay a Loan Against Property. However, long repayment tenures increase the interest rate, whereas short repayment tenures reduce it.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan Against Property disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

We are a team of expert writers and editors passionate about providing our readers with authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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