Five Reasons You May Opt for It
Whether or not to take that loan against your property is an important decision you have to arrive at. There is a high cost attached to it due to the higher interest rate compared to, say, a home loan. There is also a long repayment period—which means a long commitment to repay the loan. Keeping this in mind, here are some probable situations where you may decide to take this loan. a) There is a definite time schedule for remittance of money (situations like sending money abroad for your son’s/daughter’s admission for overseas studies). Loan against Property The individual takes the loan by mortgaging the house property. It is one of the cheapest retail loans after home loans; interest rates are usually about 11.45 per Since the rate of interest is lower, equated monthly installments (EMIs) turn out to be cheaper. Maximum loan eligibility is determined primarily by the value of the property and the income. Maximum loan tenure for LAP is up to 15 years (180 months).
What Kind of Property Can Be Mortgaged?
a) Ready-built house or apartment/flat in the name
of the loan seeker b) There are no prior charges/encumbrance on the
property sought to be mortgaged c) If the property is owned by the head of the family and the loan seeker is one of his sons (who, being one of the legal heirs, has a share in the property), e) Your business loan sanction/disbursement is getting delayed in your bank and you are in a hurry to effect payments for buying some new machinery/equipment that has already arrived at the port/inland container depot (ICD) and is likely to incur payment of heavy demurrage.
How Does It Stack up against a Personal Loan?
Personal Loan An individual can take a personal loan for personal use without any security or guarantor. It has higher interest rates compared to LAP; usually per cent. Since rate of interest is high, equated monthly installments for personal loans are higher Maximum loan eligibility is determined primarily by an individual’s income. Maximum loan tenure for personal loan is usually up to 5 years (60 months). Other fees constitute a small part of overall charges. There are normally no other fees payable other than processing fees. banks/NBFCs accept this property subject to additional conditions such as other sons joining the loan transaction as co-obligants (signing the loan documents along with the borrower) d) Banks/NBFCs do not encourage loans against agricultural land or just any urban land unless the loan is for purposes of agricultural activity (both direct finance/indirect finance)