avail a loan against property
avail a loan against property

Top 5 Advantages Of A Loan Against Property

5 mins read

A loan against property is the preferred option for many to secure financial objectives as it has several beneficial features. People choose these primarily for their longer tenors and affordable interest rates.  

According to a report, India saw a 20% rise in the loan against the property sector during the first half of 2021, proving its obvious benefits. Besides the first two, a LAP also accompanies a host of benefits that individuals need to know in detail. 

Advantage 1: No restriction on the usage of funds

When individuals avail a loan against property, they do not have to disclose the purpose of the loan. It is not subject to monitoring by financial institutions or HFCs.

Hence, there is no limitation on what the money can be used for, provided it is not used for speculative or illegal purposes. 

Some potential reasons may include medical emergencies, expanding your business, funding a child’s further education, etc. 

Advantage 2: Lower loan against property interest rate

Compared to unsecured credit, a loan against property has the advantage of having a lower interest rate. It is because the lender assumes a lower risk due to collateral. 

Moreover, lower interest rates imply greater benefits for the borrowersTherefore,  are reduced repayment efforts and lower costs of the loan. With lower EMI payable, individuals can achieve their other financial goals effortlessly.  

Besides, existing borrowers can also opt for a home loan balance transfer to reduce the interest and EMI burden. 

Advantage 3: Larger sanction amount 

Again, when compared to any unsecured loans, the amount of money sanctioned for a loan against property is greater. You can get up to 70% of a property’s value as a loan amount. 

However, the loan amount depends on various factors like borrower’s eligibility, property type, current property valuation, etc. However, it is preferable to know how to apply for a loan against property for faster loan processing. 

Advantage 4: Longer repayment tenor

A LAP has a longer repayment tenor, implying a lesser EMI. Sometimes, the tenor can stretch up to 20 years as well. 

Hence, with a longer tenor, the EMI becomes affordable. However, it increases the total borrowing cost, including interest payable. 

Individuals can use a property loan EMI Calculator to know how much EMI to pay before availing of the loan. Moreover, individuals can also compare different lenders and adjust the tenor and principal to arrive at a suitable EMI payable. 

Advantage 5: Easy to avail

Financial institutions are more ready to sanction a loan against property as it is secured. In addition, since the property acts as collateral, the lending risk is lower. Therefore, lenders approve and sanction this loan faster. 

Individuals can follow the steps below to opt for this credit. 

  1. Visit the official website of your preferred lender.
  2. Read eligibility criteria and terms and conditions. 
  3. Fill up online application form with relevant details. 
  4. Click on “Submit”

The representative of the lender will contact you shortly to initiate loan processing. Additionally, a loan against property Customer Care executive can help solve all the queries regarding availing the same. 

Certain financial institutions extend pre-approved offers on loans against property to simplify the borrowing process. Such offers are also available on home loans. To check the pre-approved offer, borrowers can utilise their contact information such as phone number and name. 

Hence, lower interest rates, longer tenure, lower EMIs, easy avail, lower loan cost, and no end-use restrictions are the various benefits of a loan against property. Lastly, when used for certain purposes, these loans provide tax benefits, such as purchasing a house or starting a business.  

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