A loan against property is a secured loan where a residential/commercial property is pledged as collateral. It is a long term loan. Loan against property is very popular among self-employed people. Loan against property is affordable compared to personal loans as the interest charged is comparatively low.
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The rate of interest on loan against property ranges from 9-14% a year. Though loan tenure for loan against property ranges from 1-9 years, it can be extended up to 15 years. The lender checks your credit score before sanctioning the loan. To avail a loan against property, you should have a clear and marketable title to the property.
Banks provide loans ranging from 50-65% of property value. NBFCs (Non-banking Financial Companies) offer loans up to 75% of property value. A loan against property has a processing fee ranging from 0.5- 1.5% of the loan amount sanctioned.
LAP helps meet long-term and short-term financial requirements like children’s education, business, medical emergencies, and so on.
Lenders ascertain eligibility to avail a loan by taking into consideration a percentage of property’s market value and the capacity to repay. Usually, non-banking financial companies (NBFCs) and banks offer a loan amount ranging from 50- 65% of the property value.
The tenor of a loan against Property ranges from 1 to 9 years. However, it can be extended up to a period of 15 years.
The rate of interest for a loan against property is lower than a personal loan. Loan against property has a rate of interest ranging from 9-14% a year.
The fees, charges and penalties payable on a loan against property are as follows:
To process your application for a loan against property, some documents are required. Some of the documents differ for self-employed and salaried persons. Take a note:
It is good to avail a loan against property, instead of a personal loan. Assess your ability to repay the loan before knocking on the bank’s doors. Do not get trapped in debt. Avail loans only when absolutely necessary!
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