LOAN AGAINST PROPERTY: THE BASICS!

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Posted on: 20 March 2017 by Amit Mandal

If you have planned to raise some funds, the most common method of doing so is to avail a loan. Loan might be a personal loan or you might possibly plan to take a loan against your any of your fixed assets, preferably, property. If you opt for option No. 2 then you will be going for what is known as LAP or Loan Against Property.

Loan against property as the name suggests, is disbursed against the mortgage of the property in the name of the applicant. The loan amount is generally decided upon a pre-decided percentage that is commonly 40% to 60% of the total value of the property. Thus, this kind of loan is categorized under secured loan and the applicant’s property is the security. There are various reasons. You can use the loan amount for raising funds for meeting the working capital requirement of your business, marriage, for funding higher or foreign education, getting medical treatments or any other personal reasons.
 
A loan can be procured for any property, irrespective of the fact that you self-occupy it or rent it out. Also, it does not matter whether the property is just a piece of land or has a full-fledged construction. The bank will decide your eligibility on the basis of your income, savings, liability and other obligations value of the property that is put as a collateral and your previous loan track record if any.  Some banks can have other criteria for evaluation.
 
Talking about the interest rate on LAP, they can begin around 10.4% and the most beneficial part of a loan against property is that the tenure of repayment can go up to 15 years. Thus, this is a comfortable option.
 
Loan against property is the finest ways of getting heavy funds. Just like the other secured loans, the lender has one and only risk. That risk gets active once the applicant of the loan fails to repay the borrowed amount, the bank takes over the ownership of the property which is kept as a collateral. Thus, before opting for this kind of loan, the applicant should self-evaluate their capability of paying back the borrowed amount. You can raise heavy funds at loan against property in Delhi, Gurgaon and other developed cities.

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