Everyone has faced financial setbacks at some point in their life, it’s like an uninvited guest. These setbacks always turn up unannounced at the wrong time and derail your plans. Many of us might not have an emergency fund ready and need to fall back on other unpleasant options, like taking a loan from a relative or a friend.
So how do you arrange for money at these times of crisis? One such recommended option is getting a loan against property.
This loan is a secured loan which means, the bank never hesitates in offering a good loan amount against the property being used as collateral. There are several benefits of loan against property [LAP]. Let’s take a look at all the benefits it has to offer.
Secured Loan
The chances of getting a loan against property approved is high as it is a secured loan, where the risk-factor of recovering money in case of a default, is difficult for the banks or financial institutions providing funds.
Serves Variety of Needs
There are not many restrictions as to how to utilize the funds when it comes to loan against property. However, most people borrow against property in situations of huge funding requirements for education, medical costs, purchasing a new house, travel plans, etc. But before applying for LAP, check with your loan against property eligibility for quick loan approval.
Flexible Loan Tenure
The duration is longer in this case, which makes a loan against property a favorable option, with the tenure extending to around 20 years.
Loan Based on EMI or Overdraft Facility
You can pay the loan either through equated monthly installments or overdraft facilities, whichever is suitable. It is the estimation of the property along with your account history, which confirms the overdraft limit. LAP tenure is longer than other loans. Thus, you may have to pay smaller EMIs if you choose a longer tenure.
With the help of a loan against the property EMI calculator, you can calculate your monthly installments for the repayment of your loan. Using an online loan against a property calculator is a simpler way to derive EMIs for the same.
Borrowing against Different Property Types
You can take a LAP on commercial and residential property. You need to own the property in order to get the loan sanctioned. This loan can be taken on a piece of land you own and even in few cases properties that are under construction.
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.
Top Up
When you take a property loan, you also have the option of top-up funding. The latter can be taken only on existing loan against property. Some banks provide the facility of taking a top-up on a home loan.
A loan against property is one of the best ways to raise money especially when the property market is optimistic. Like any other loan, repayment defaults also negatively impact the borrower’s credit/CIBIL score, which will be charged on loan repayment.
It is therefore wise enough to thoroughly assess one’s repaying capabilities and understand all associated conditions before opting for a loan against property.