What are the benefits of loan against property?
1.Lower interest rate
A lower interest rate on the borrowing from a loan against property is probably the most important benefit available for the borrower. This saves a lot of expense for the loan and hence makes the loan more affordable for the person. The interest rate is lower than other options like a personal loan or a credit card borrowing where the funds can be used for a wide variety of purpose without informing the lender.
2.Easier to obtain
A loan against property is also easier to obtain in terms of clearance and other factors once the necessary security is available. If the property is available, it does not have a mortgage and can be given as a security; it will not take much time for getting the entire loan cleared. This is because the specific steps related to the loan against property will ensure that the process is completed without much wastage of time.
The presence of a property often proves to be an adequate security feature of the loan. Like several other assets like shares, which might witness a massive reduction in their value, a property does not witness such a large change in the position. In several cases, the property value actually rises with each passing year and in such a situation it proves to be an adequate security for the purpose of the loan.
There are several conditions that are specified for a loan against property. This means that there are standard conditions that are related to this loan and the individual has to ensure that he/she is able to meet them. The conditions include the mode of disbursement of funds, the manner of repayment, interest calculations and so on. This removes a lot of doubt from the mind of the borrower and the transaction can also be understood easily.
5.Larger loan possible
The other benefit for a loan against property is that a larger amount of loan is possible. This depends upon the property and its value, which allow a bit of flexibility to the borrower. If the funds required are slightly larger than what the individual can raise through other sources then he/she can go for the loan against property to raise the necessary amount of funds. There is usually no major restriction in this regard as long as the loan against property can be serviced and the person then is able to complete the goals that are related to the requirement of funds.
6.Use of idle property
In many cases, there are properties that are lying unused for a lot of people. This will not be beneficial in any way and at the same time various circumstances might also make it difficult to raise funds from the property unless it is sold off. In such a condition, using this to take a loan against the property will be a very good way to ensure that the best use is made of the property that is actually lying idle. This will also ensure that proper use is also made of the asset available with all those people who want to raise funds.