The easy availability of funds against property under an individual’s ownership makes a property loan an extremely popular borrowing mode in India. Another main reason why most Indians are applying for a property loan today is that it is much cheaper than a personal loan. Individuals who apply for property loans continue to own their property even after getting the loan. Besides this, applicants can transfer their balance to use it further for other expenditures without restrictions.
Let’s discuss further the key features and benefits of a loan against property.
Features and benefits of a loan against property
A loan against property is available with the following features and benefits:
- Optimum use of property
The real value of your property gets revealed when you apply for a property loan. With a property loan, you continue being the owner of your property and get a loan against it at an attractive interest rate.
- Borrowing against any property type
A loan against property is pretty flexible by nature. You can easily avail the loan against any type of property. For instance, it can be your own house, rented residential, commercial property, or even a piece of land.
- Flexible loan amount
The amount of loan that you can avail of against your property depends on the present market value of your property. Therefore, your property’s market value and the percentage of loan you can avail of are directly linked. In other words, the higher the market value of your property, the higher will be the percentage of your loan against property.
- End-use flexibility
As a borrower, you can use this loan amount for any other purpose. For instance, you can use it to meet medical expenses or invest in your start-up. In addition, there are no restrictions to how you use this loan amount against property.
- Flexible repayment loan tenor
Initially, getting a property loan is a long-term commitment. As a borrower, you can repay your loan amount at your own pace of time. Initially, the repayment tenor varies between 12 months to 20 years.
- Minimal debt burden
The tenor is long in terms of property loans, and the interest rate on this type of loan is always pretty low. Considering these two factors, the debt burden on the borrower becomes bare minimal over time.
- Top-up facility
Top-up facility is available with a loan against property. As a borrower, you can avail of this top-up facility by simply leasing or mortgaging the same property against which you want the loan.
In comparison to other types of multi-purpose loans, loan against property is more pocket-friendly by nature. The loan against property interest rate varies between 12% to 15%. On the other hand, the interest rate for other personal loans ranges between 12% to 25%.
In case of sufficient funds, a borrower might consider closing the LAP account before time. However, this advantage of paying the outstanding amount before time does not include any additional charges against it and is only available under LAP.
- Eligibility criteria
The eligibility criteria for a loan against property highly depend on where you are taking the loan. For example, at Bajaj Housing Finance, eligibility criteria for LAP are minimal.
- Individuals should have a steady flow of monthly income. Therefore, a loan against property without income proof will not be available.
- Should have a valid ID proof
- Must provide property ownership documents during the loaning process
If you consider yourself eligible for LAP, you must further consider knowing the documents required to apply for a property loan.
Documents Required for a loan against property
To avail loan against property, these documents are essential:
- Valid and Govt. of India approved ID and address proof
- Original Employment proof
- Authentic proof of income
- Original ownership documents of the property
Furthermore, borrowers should also know how to apply for loan against property online.
How to Apply for a property loan?
Through the following steps, you can easily apply for LAP online:
Step 1: Visit your lenders’ official website. Look for the loan against property online application form
Step 2: Fill up the form with valid details like name, DOB, contact details, and address
Step 3: Mention your income details appropriately to avail the best deals
Step 4: Submit the application form
By clicking on the submit button, you complete submitting your online application form for a loan against property.
Property loan is one of the most applied options in India, considering the affordable loan against property interest rates. Businessmen and salaried individuals can simply mortgage or lease residential or commercial property to avail this secured credit option. Individuals will get a percentage of their property’s present market value as a property loan. This is also known as the loan-to-value ratio.
You can get multiple benefits from this secure loan type as a borrower. Additionally, LAP flexibility regarding tenor and repayment options reduces the borrowers’ debt burden.