Loan Against Property In India: A Brief Overview

A loan against property in India is not very common. In fact, the concept of loan against your home is taboo in most Indian communities. However, the fact remains, that property is a valuable asset and you can certainly use it to your advantage instead of opting for a humongous and unaffordable personal loan or a credit card debt. Thus, here is what you need to know about the loan against property in India .

What is a loan against property (LAP)?

This is a secure loan against an asset, pretty much like any other loan against assets. The interest rates for a LAP are lower than for unsecured loans like personal loans. The primary eligibility criterion is the value of the asset rather than the repayment ability or credit score. So, thisis much easier to avail for people, who are financially challenged at the moment.

What are the consideration factors for loan against property in India?

You will need to complete the standard loan application process with the required documents. You will also need to meet the eligibility criteria of the lending company. Nonetheless, when you apply for a loan against property with a housing finance company or a bank, you must do so with due consideration to the following factors:

• You will need to give time to the lenders in order to process the market value of your property, which varies from 5 working days to 2-3 weeks, based on the lending organization.

• The loan amount depends on the third party analysis conducted by the housing finance company. You will receive approximately 80% to 85% of the market value of the property, which will be decided by the lender.

• You can negotiate for competitive interest rates on the loan against property, if you have the required documents to demonstrate good repayment ability and credibility.

Thus, you can also receive a higher loan amount at lower interest rates by opting for loan against property. Additionally, you can enjoy more relaxed repayments as the monthly EMIs will be lower.

When is the right time to apply for loan against property?

In one sentence, when the loan amount is much higher than you can easily borrow. It is not advisable to risk your property unless there is no other choice available. If you can take a loan against shares, fixed deposits, gold or luxury items, you should. The cost of property is the highest among the several assets for most individuals. So, take a rough estimate of the market value of the property and if it is approximately the amount you need, then apply for loan against property. If you have other assets available, do include them in your consideration.