Loan Against Property (LAP) is availed by keeping your property as a security with the bank. It can be used for multiple purposes such as business expansion, marriage expenditures, higher studies or for medical emergencies. Since Loan Against Property is a secured loan, the rate of interest is generally lower as compared to unsecured loans. This type of loan is especially beneficial for business people. As a business owner, you may need money from time to time for purposes such as meeting working capital requirements or you may run out of money. There are several advantages of taking LAP: a) As these are secured loans, the rate of interest is generally lower as compared to other types of loans. b) These loans are available for longer tenure which means that you have got ample time to repay your loan. c) Since a loan against property is a secured loan, banks are more willing to provide this loan. The processing of such loans is also quick. d) If you opt for a floating rate loan, you are not required to pay any prepayment charges.
Additional Reading:- Loan Against Property in India: A Good Debt or Bad
In conclusion, every loan has its pros and cons, but a loan is a loan. If not paid back with integrity it will create a lot of problems for your financial and personal life. Hence, if you are planning to apply for LAP, make sure you first assess your repayment capacity and then go for it.
Buying a house is a dream come true for several people. However, due to the rising price of the property every single minute, only a few are able to afford such a whopping amount. In such situations, buyers turn to banks for home loans. And to make this process easy and comfortable for you, many banks and financial institutions offer pre-approved home loans to their customers. A pre-approved home loan means that the buyers are given loan by banks and financial institutions before they finalize the property.
The procedure for a pre-approved loan is the same as the regular home loan, but you are not required to submit property documents. The pre-approved home loan requires your bank statements, income tax returns, salary slips, identity proof, income details, and PAN proof. You should have an excellent credit score too. A few advantages of availing a pre-approved home loan are: a) Faster loan disbursal b) Focused house hunting c) Better negotiation power d) Better planned finances. Before availing a pre-approved home loan, check for penalties and charges. Also, opt for pre-approval only after selecting a few properties.
Additional Reading: –Pre-approved Home Loan – Key to your Dream House
Hence, a pre-approved home loan gives you a head start that a regular home loan doesn’t. You can start planning for your home well in advance and be ready to purchase it at the right time without having to deal with a last-minute loan rejection.
The need to funds arise at any point of life and if you have a commercial property you can come out the requirement of funds by taking a loan against property. The overall lending process is the same as the residential property.
You would find many banks and Non-Banking Financial Companies (NBFCs) in the market who are ready to provide loan against commercial property. There are many things you must be aware of before going through the loan against commercial property such as Low loan to value ratio (LTV). The value of the Commercial property is generally higher compared to residential property but the LTV ratio of the commercial property is lower compared to the residential property. The LTV of residential property ranges between 65-75% and rest is the down payment. On the other hand, LTV is restricted to a maximum of 55% commercial purchases in case of commercial property. Interest rate of the commercial loan against property is generally higher than the residential property. The different lender has a different rate of interest, you must check with all the lender in the market before going to any decision. There are no tax benefits on the repayment of interest of loan against commercial property.
You must have a minimum area of 250 sq ft. for getting a loan. So, these are the things you must be aware of before taking any decision. It is suggestable to go through all the important facts.
Taking a home loan is one of the biggest financial commitments that you make, due to the high amount involved. Hence, this decision should be made after careful evaluation of all factors. The most important factor that you should take into consideration before applying for a home loan is your EMIs.
When you are calculating your home loan EMI, ensure your financial life is not adversely impacted due to the home loan. Take into account all the factors that can have a direct influence on your home loan EMI. The first thing that you should keep in your mind is interest rates. If you have taken a home loan at floating interest rate, there would be a change in the EMIs depending on the prevalence rates in the market.
Whenever there is a dip in the bank rates, your EMIs will reduce significantly. Also, they do not involve prepayment penalties. Next is your loan tenure. A change in your loan tenure can have a great impact on your monthly installments. The longer the tenure, the lower will be your EMI and vice versa. Further, it is highly advisable to check the pre-payment clauses with your lender before you sign the loan agreement.
Lastly, home loan borrowers can shift their home loan to a different lender to avail a lower interest rate benefit through a home loan balance transfer. Hence, there can be several factors which may impact your EMI during the tenure of your home loan. Carefully compare all the home loan offers available to you before making your final choice.
ALSO READ: – Factors that can affect your home loan EMI
Loan against property is a secured loan availed by mortgaging commercial as well as residential property for meeting various personal needs like a vacation, higher education, wedding etc. and business needs like setting up a new business, for the purchase of new equipment etc.
There are several benefits of taking a loan against property like being a secured loan the chances of approval of your loan application are higher. Secondly, this loan is available at a lower interest rate in comparison to other unsecured loans. Thirdly, loan against property is a long-term loan available for a period ranging up to 15 years, which implies flexible repayment tenure as per your affordability. Lastly, loan against property like other loans allows pre-payment and if your loan is on floating interest rate, you incur no pre-payment charges on it, else you may have to pay foreclosure charges as per your loan terms and conditions. Looking at the several benefits of taking a loan against property, you can apply for it offline as well as online. Applying online is better as you get complete assistance during the loan process from the loan’s representative and it saves you from the need of visiting bank as well.
Additional Reading: – Cover all of your personal expenses with Loan Against Property
A loan against property is the loan that you avail by keeping your property as collateral with the bank. The loan is given as a certain percentage of the property’s market value, typically around 40-60%. The tenure of the loan could go up to 15 years. The eligibility criteria to apply for LAP differs from bank to bank. The general criteria include Age, income, FOIR, credit score, employment history and property documents. A loan against property comes with several advantages such as:-
a) The long tenure of the loan makes the EMIs more reasonable.
b) The interest rate is low as compared to unsecured loans.
c) No prepayment charges.
d) Easy to get since they are secured loans.
The loan is granted against the mortgage of the residential, commercial and industrial property. The main documents required to avail the loan are KYC documents, income proof, bank statements, the business existence proof, and property documents.
Additional Reading: – Things no one tells you about Loan against Property
In conclusion, a loan against property is one of the best ways to raise funds. The only disadvantage of such a loan is that if you fail to repay the loan in full, the bank or financial institution can take possession of the mortgaged property. So, base your decision on your repaying capabilities.
If you are planning to buy a house then the festive season is the right time to loosen your purse strings. Diwali is considered an auspicious time to buy a new thing like a new house. Buying a home is not an easy time task because it requires a huge investment. Diwali is the best time to buy a new home because most of the banks and NBFCs offers Home Loan on various attractive offers like a lower rate of interest, waive off processing fees, longer tenure and number of EMI options and so on.
On the occasion of Diwali, salaried people got bonuses, incentives etc and most of the people save in the preceding months in order to be splurge during festivals. People believe the Diwali deemed auspicious for buying a property. It is not enough to know the best time to buy a home and take the plunge with a herd. The more important thing is to know how to clinch the best deal at the most opportune time and it will be suggestable to apply for a home loan online as it will save your precious time.
Builders also offer attractive offer during Diwali because many new projects are launched during Diwali with a number of attractive offers. So, these are the reasons which suggest that the Diwali is the best time to a new home by taking a home loan.