Loan Against Property as the term connotes is a loan disbursed against the mortgage of property. It is the loan against the security of one’s property. The loan is given as a certain percentage of market value of property that is usually 40 to 60%.The property can be industrial, commercial or a residential property. It is one of the best types of loans present in the market. Its added advantage is that the rate of interest is lesser than the personal loan.This type of loan is useful to fulfill the needs in times of requirement like wedding, business extension, higher education, medical treatment or any other investments.Eligibility to get a LAP:
- The person who applies for LAP should have a self- owned property.
- The eligibility depends on the cost or the value of the property mortgaged.
- Income, savings and debt obligations are also taken into account.
Benefits of LAP:As compared to other types of loans, Loan Against Property has various benefits. Some of the advantages include:
- One of the most important benefits for the borrower is that LAP has lower interest rate as compared to other types of loans. Therefore the loan is more affordable to the person.
- As the rate of interest is lower, the outflow of funds is less and timely repayment of the loan is possible. The EMI is cheaper.
- LAP is one of the cheapest retail loans after home loans.
- Loan against property has longer tenure as compared to personal loan. The tenure can be of 10 years maximum.
- As the property already exists in the loan procedure, the LAP processing is faster than home loans.
- Incase if the borrower is not able to pay the loan then he can sell the property and clear the loan, therefore the land will continue to be in the tenure of the borrower.
- LAP is comparatively a secured loan as it requires minimal documentation and is approved faster.
- Depending upon the property and its value, larger amount of loan is possible which allows bit flexibility to the borrowers.
- If you are having an idle property then Loan Against Property is the best option. You can make the best use of the property rather than leaving it inactive. It will be beneficial to raise the funds.
- Most of the time the property rate rises in certain period of time in such circumstances it proves to be a sufficient security for the purpose of the loan.
LAP is one of the efficient ways to raise the funds and a secured multipurpose loan.