All you should Know about Loan against Property

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Loan against Property
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All you should Know about Loan against Property
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• Loan against Property Loan against property can
  be availed against a self-occupied residence or a
  commercial house. The foremost prerequisite on
  the bank's part is that there should not be any
  other encumbrance.
• Loan against Property is the most secure of loans
  therefore the lending rate is normally low
  compared to other unsecured loans.
• However, because of the configuration of lending
  by banks, they have a propensity to be somewhat
  higher than housing loans.
• The eligibility criteria for getting Loan against
  Property is also laissez-faire, as the property
  is available as collateral. The repayment term
  can also be long from 5 to 15 years.

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When to look at Loan against Property? 

• For anyone who has a house or commercial property
  and is looking for a loan, Loan against Property
  should be the first option.
• The only loan with better features could be the
  gold loan. But there could be a lot of sentiments
  attached to pledging gold, so it generally gets
  done as the last alternative.
• That leaves the Loan against Property as the
  better choice.
• Though a housing loan and the Loan against
  Property are secured against the property, Loan
  against Property is on the existing assets and
  the assessment of the property is released for
  productive activity.

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• For a businessman looking to inflate business,
  Loan against Property comes in versatile as they
  do not have to gaze for expensive sources and the
  processing is also much quicker.
• A few banks also give overdraft facility against
  the property this will help the business as
  interest will need to be paid only for the amount
  used.
• Funding children's education can also be done
  using Loan against Property also their
  marriages. But as a general rule, one has to be a
  cautious when taking loans for expenses.

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Value of the asset owned is free for productive
use

• The interest rate is lower than other options
  like a personal loan or a credit card borrowing
  where the funds can be used for a wide variety of
  purpose without informing the lender.
• Processing is quicker than a housing loan as the
  assets is already in our ownership.
• Partial pre-closure is authorized without any
  penalties. This is an advantage as the overall
  interest burden or the tenure of the loan can be
  abridged by paying small additional amount.
• If the assessment of the property has risen over
  a period of time, a re-financing option can be
  used to augment the loan amount. This aspect
  again is very constructive for businessmen, who
  are on an expansion spree. They can use the same
  property to constantly build the business.
• The property continues to be in the possession of
  the borrower.

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Some disadvantages of Loan against Property

• Banks usually do not give loans beyond 60 per
  cent of the assessment of a house property and 50
  percent of a commercial property.
• New businesses generally cannot have access to
  Loan against Property. They should have been in
  continuation for at least 3 years. Salaried
  persons can get it if they are in employment for
  over 1 year itself.
• There will be some processing charges usually in
  the range of 0.5 percent to 1 percent.
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