As a landowner, one may, at some point, find themselves in a position of requiring pecuniary assistance. In such an event, a loan against property (LAP) can be of service. It is a guaranteed credit facility, enabling you to obtain finances against the market value of your land. Before opting for a loan against property, it is crucial to acknowledge the facts. This article imparts four critical details that you must bear in mind before applying for a LAP, coupled with the present lowest rates of interest obtainable in the market.
To be deemed fit for a loan against property, specific criteria must be met. Most banks and financial organizations typically have comparable conditions for eligibility, which include the following:
The amount of loan you can obtain hinges on the value of your property, the objective of the loan, and your reimbursement potential. Usually, one can receive a loan amount of approximately 60% to 70% of the market value of their property. The time duration of the loan fluctuates from 5 to 20 years, depending on the policies of the lender and your capacity to repay the loan
The interest rates of loans against property are generally lower than other forms of unsecured loans. Presently, the minimum rates of interest for LAPs in India range from 7.50% to 9.50% per annum. It is crucial to note that the interest rates are dependent on the lender, loan amount, and tenure. Besides the interest rates, other charges may apply, such as processing fees, prepayment charges, and foreclosure charges. Therefore, it is necessary to peruse the terms and conditions diligently before applying for a loan.
Loan against property allows for the luxury of flexible payment options. One may choose to remit payment in Equated Monthly Installments (EMIs) or opt for bullet repayment, paying the whole loan amount at the termination of the tenure. Nevertheless, if the loan defaults, the lender can take hold of your property. Thus, it is imperative to have a reimbursement plan and the capacity to bear the EMI costs.
The following are the present lowest interest rates offered by some of the leading lenders in India:
A loan against property is an excellent option for financing major expenses, such as medical emergencies, education, or business expansion. However, it is crucial to apprehend the eligibility criteria, loan amount, interest rates, and reimbursement procedures, before making informed decisions.