Loan against property is a secured loan given mainly to self employed people to fulfil any kind of financial requirement. Though this loan product is specially designed for self employed, it can also be availed by salaried individuals having a specific need of funds. LAP works as a saviour and help to find numerous solutions to financial problems. It’s a convenient way to raise funds from the banks/NBFC on lowest possible interest rates with. As the name suggests Loan against property is the loan given against the existing property which is kept as a security with the lender. LAP comes under the secured loan category. The loan amount depends on the market value of the property and the amount can vary between 45% to 75% of the market value. The percentage on which the loan is give depends on the nature of the property being offered as security.
There are many other reasons to use the money borrowed.
There are many unique advantages of Loan against Property that makes it a desired loan choice.
The eligibility criteria for the banks has to be fulfilled as the lender generally demands for the certified financial statements for the last 3 years are required along with the proof of residence, proof of identity, business proof and relevant documentation to the concerned property.
Loan eligibility usually depends on the borrower’s credit rating along with other factors like nature of business, income, age, qualification, number of dependents, spouse’s income (if any), existing loans and EMI, assets and liabilities and the continuity of business/service. The most important factor in this type of loan is the current market value of the property, and the clear legal ownership of the property against which the mortgage will be created.
Once the loan is approved, lenders disburse it either in full or in installments as discuss or instructed by the borrower. The borrower can choose between fixed and floating rate of interest at any time during the tenure of the loan and generally an option for partial and full prepayment of the loan is provided.
The LAP given to the borrower is based on the percentage of the market value of the property. However, it is important to keep in mind that a bank / NBFC always hold a certain amount of margin money so as to avoid a situation in case of non-repayment of EMI. In that case lenders can sell the property and settle the loan. This ensures that the lenders are protected against any regular change or variation in the real estate market and a rise or fall in prices. (To know How to calculate the income Eligibility For Loan?)
The choice of loan completely depends on the borrower’s need, availability of the property to be mortgaged, lender’s policy, urgency and the purpose of the loan. Here, at Mudrahome.com