4 things you must know about Loan Against Property: Check lowest interest rates

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.

Criteria for Eligibility

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:

• Age: Ranging from 21 to 60 years
• Ownership of Property: The property that you desire to mortgage should be under your name
• Valuation of Property: Your property must be worth at least Rs. 50 lakhs
• Income: Your revenue source must be consistent to reimburse the loan
• Credit Score: A good credit score is essential to qualify for the loan

Amount of Loan and Tenure

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

Interest Rates and Charges

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.

Repayment Options and Risks

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.

Lowest Interest Rates for Loans Against Property

The following are the present lowest interest rates offered by some of the leading lenders in India:

• HDFC Bank: 7.50% to 8.25% per annum
• ICICI Bank: 7.95% to 8.80% per annum
• Axis Bank: 8.75% to 9.50% per annum
• State Bank of India: 7.80% to 8.55% per annum
• Kotak Mahindra Bank: 8.90% to 9.60% per annum

Conclusion

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.