Five Rea­sons You May Opt for It

Consumer Voice - - Bfsi -

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)

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