What are the Benefits of Loan Against Property?

These days, for getting instant funds, you have various options to choose from. You can either opt for secured loans or unsecured loans based on your requirement. A loan against property is one of the most preferred secure loans. It is often chosen because of the spending freedom you get along with flexible repayment duration. It is a financial instrument that allows keeping any property as collateral to avail quick funds. Compared to other loans, a loan against property helps you in maintaining financial stability even in the long run. If you have a good credit score and are confident to pay timely EMI’s, repaying the loan won’t be a problem for you. With low interest and long repayment tenure, you can get large funds without worrying about the repayment. 

A loan against property is a type of secure loan which is offered when you keep your residential or commercial property as collateral. This loan is granted by finance institutions and banks. Compared to other traditional loans, loans against property are offered at a low-interest rate. 

What are the Benefits of Loan Against Property?

A loan against property has incredible advantages that can help in time of need. Here is a list of benefits of applying for a loan against property. 

Lower rate of interest 

One of the most important benefits of a loan against property is that you get low-interest rates. Since the loan against property is a type of secured loan, lenders provide this loan at a lower rate of interest. A lower interest rate means lower EMI’s, thus the loan against property is pocket-friendly. 

Continued ownership of the property

Even if you have pledged property to procure a loan, you don’t lose the ownership of the property. You can use the mortgaged property while keeping it as a security. You can mortgage different types of properties like rented property or self-owned property. It can either be a residential property or a commercial property such as shops, complexes, malls, and office buildings. 

Partial loan disbursement

You also get the benefit of partial loan disbursement while taking a loan against property. You can disburse a part of your loan amount and the remaining amount can be kept for a later stage. A loan against property is advantageous if you are taking it for construction purposes or long-term working capital. You can take the sanctioned loan disbursement in several shares as per your needs. 

Long loan tenure

In the case of unsecured loans, you get a short duration to repay the loan. But when you take a secured loan, you get longer tenure for repayment. A loan against property is the most feasible option for borrowers in need of funds as you get a lower interest and long repayment tenure. Due to this loan feature against property, you get to pay smaller EMI’s. 

High loan amount 

If you need significant funds, a loan against property helps you get a high loan amount that you can use for personal or business needs. As it is a secured loan, you get funds up to 70% or 75% of the property’s market value. Since it is based on collateral, the loan is available for longer tenure and a lower interest rate, which helps you get a higher loan amount. 

Factors affecting the interest rate

A few factors are mentioned below that affect the interest rate of a loan against property. 

• The interest rate charged by the lender is determined by the loan repayment tenure. Smaller tenure will result in a higher interest rate and vice versa.
• If you wish to receive a lower interest rate, you should have a credit score of 700 and above. 
• Income, occupation, and age also affect the interest rate charged by the lender. 
• The type of property and market value of the property determines the interest rate. 

How to apply for a loan against property?

The process of applying for a loan against property is easy and time-saving. Here are simple steps you can follow while applying for a loan against property. 

• Visit the official website of the banks or financial companies and click on the application form. 
• Fill in all personal details in the form and attach the required property papers to the form. 
• You will have to enter income and financial details to understand the loan offer. 
• Carefully check your application once and submit it. 

After filling in all the necessary details in the form, a representative will get in touch within 24 hours to help you with the further procedures to procure the loan. 

Loans against property offered by various banks and institutions have different eligibility requirements based on which the interest rate and loan amount is decided. The documentation process of a loan against property is generally straightforward. If you want instant funds and don’t want to go through the lengthy application process, then it is the most suitable option for you.