Tips About How to Get Loan Against Property

Most of the financial institutions are noticing a steady growth in LAP or loan against property; more and more people are opting for this option. This is a kind of secured loan, where you can mortgage your property to the lender. But you must be confused about where to start and how to handle things. Let’s begin our journey about how to get loan against property!

Some vital information about the loan

LAP or loan against property is cheaper than personal loans. In this type of loan, the borrower normally mortgages his property, which makes this a secured loan. Personal loans are unsecured; the interest rate of the personal loan may vary. It can start from 13.75% and go up to 25%. But for loan against property, you will have a flat interest rate.

LAP or loan against property can be availed for buying machinery, commercial property, and new property, getting finances for a child’s education and for any type of personal or business need. But there are different types of LAPs and it may vary according to the type of property. For instance, if the property is self-occupied, you may get 65% of the total value, if it is residential. In case, it is a commercial property, you will get 50% of the total valuation. In case the property is rented, you will have 55% of the total value in case it is residential. For a rented commercial property, you will get 40% of the total value. In case of a vacant residential property, you will probably get 55% of the total value, and for a commercial one, it will be 40% of the total amount.

Knowing about the interest rate and the tenure

The question of tenure and interest rate comes to the mind when you think about how to get loan against property. Most of the LAP borrowers will find the tenure of 15 years quite comfortable for monthly repayments. This also means less EMI burden. But, there is a small catch. Although the tenure and the EMI will be less, you will have to pay more interest rate. Actually, most borrowers are comfortable with the longer tenure because this means that there will be no curtail in the monthly budget and they can pay the entire amount without any difficulty.

What is the function of the bank or financial institution?

LAP or loan against property means that the property will be handed over to the bank from the day you have taken the loan till the day; you will repay the entire amount. But if you seek expert advice, they will tell you that it is a bad idea to take loan for a longer period. The reason is obvious; longer the tenure, longer will be the days when your property will be locked. If your only property remains with the bank for a long period, it becomes impossible to use it for other purposes. If your conditions and financial situations permit, then you should refrain from taking the loan for a longer time.

When you think about how to get loan against property, there will be many questions that will lurk in your mind. Either, you can talk to an expert and do some research in order to find the best possible loans!