One must always keep a fact in mind when we talk about a loan against property (LAP) that this loan is a secured loan. Therefore the bank never hesitates in offering a good loan amount against the property being used as collateral. There are several benefits of LAP, and in this post, we will introduce these benefits.
- Secured Loan
There are good chances of getting a loan against property approved as it is a secured loan in comparison to an unsecured loan, where the risk factor of recovering money in case of a default, is difficult for the banks or financial institutions providing funds. Secured loans are a great way of improving credit scores. The property title must be clear, and you need to furnish some other proof to get the loan.
- Serves Variety of Needs
You can use the loan amount to fulfil all your needs that fall under legal demands. There are not many restrictions as to how to utilize the funds when it comes to LAP. However, most people borrow against property in situations of huge funding requirements such as for education, medical costs, purchasing a new house, travel plans, setting up a business, marriage etc.
- Cheaper Loan Option
A loan against property is a cheaper loan compared to unsecured loans and thus, an effective way to meet your monetary demands during times of financial need.
- Flexible Loan Tenure
The loan duration is longer in this case. Thus loan against property is a good option, with the tenure extending to around 20 years, in case, the loan amount is high.
- Loan Based on EMI or Overdraft Facility
You get the benefit of paying the loan either through equated monthly instalments or an overdraft facility, whichever is suitable. It is the evaluation of the property along with your account history, which confirms the overdraft limit.
- Comfortable EMI Routine
Mostly, LAP tenure is longer (say up to 10 to 30 years or lesser), than other loans. Thus, you have to pay smaller EMIs if you choose a longer tenure. If you do not mind a larger outstanding loan amount because of the longer loan term and are comfortable paying in instalments, then LAP is the best choice as a loan type.
- Borrowing against Different Property Types
You can take LAP on commercial and residential property. The property in question must be owned by you so as to get the loan sanctioned. It can be taken on a piece of land you own and even in a few cases properties that are under construction. Banks will consider a lot many factors, especially property valuation, and legal clearances to it, before sanctioning the loan amount.
- Pre Closure
Just like the option to pre-close other types of loans, you can also prepay the loan against property to clear off the liability sooner than the term decided. But in case the loan was on fixed interest, there is a possibility that you have to pay a prepayment penalty.
- Top Up
When you take a property loan, you can even opt for top-up funding. The latter can be taken only on existing LAP. It is beneficial if you require an additional monetary fix on the said property. Even for a home loan, some banks give the facility of taking a top-up loan.
Thus, you can apply for a loan against property and get abundant benefits. Apply with loanbaba.com and get the best offers from banks and NBFCs. Online paperless process and quick disbursal guaranteed.