Loan against property is one of the finest and most secure loans offered by the current Indian financial sector. As this loan is the most secured loan, its rate of interest is normally lower than many other unsecured loans. Applying for this kind of loan is pretty simple. You need to present a property as collateral in order to avail the loan. Land, commercial property or a house are some of the property options that can be presented as collateral. The term to repay the loan amount can vary from five to fifteen years. Even people who live in any co-operative societies can easily present their properties as collateral.
Use of loan against property
Do you want to expand your business and expect more business out of it? Are you planning to offer a strong education for your child? You can avail loan against property and fulfill any of your personal financial goals. Firstly you need to decide about how much money you want to borrow. The amount that will be sanctioned from this loan depends on the face value of the pledged property. Generally, financial institutions or banks sanction a minimum of 40 percentage of face value of the pledged property. A maximum of 70 percent of the face value of property can be availed. Simply speaking, this value is calculated on the basis of current market conditions, economy and real estate property conditions. Loan against home in Mumbai may differ from that off in Bangalore.
Basics of loan against home
The normal period to repay the loan, as offered by the lenders, is ten years. Borrowers need to repay the amount in the form of equated monthly installments. If in case you want to apply for a loan for an amount exceeding Rs.25 lacs then it is essential to mention the purpose for which you want to borrow the amount. As per the property that you offer as collateral, you can avail a loan of an amount of Rs.10 lacs up to Rs.3 crores. This kind of loan is associated with lesser documents as compared to most of other loan policies.
When to apply for a loan against property?
If you own a commercial property or a house, this loan would be the most suitable option for you. If you own a business and if you aim to expand it, applying for this loan is the smartest choice. Many banks offer an overdraft facility against the pledged property. This helps grow the business as you need to pay interest only for the amount that is used. Funding education for your child is also easily possible through this loan.
Merits of loan against home
Value of the property owned is usually free for productive use
The rate of interest is lower than other possible options like personal loan
Compared to any housing loan, the processing of this loan is quicker
Partial pre-closure is legalized without penalties
If in case the assessment of property rises over a period, a re-financing option can be considered to expand the loan amount
Loan against property, is indeed an honest financial aid for all borrowers!
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