LAP is considered an excellent way to raise a large amount of money in a short period of time. The interest rates offered on loan against property are comparatively lower than those offered on personal loan and the repayment tenure too is longer which is more beneficial for the applicants. Says Gaurav Gaur, CEO and Founder, mudrahome.com The amounts sanctioned can be as high as 70% of the property value, through which one can take a large sum of money. One should always check online loan to figure out the expected monthly pay-outs.
Advantages of LAP
Before you apply for a loan, one should compare loans online then decide on the one.
- The LAP being a secured loan is given only against residential property or a commercial property, with the property offered as a security to the lender.
- One can borrow amounts as high as Rs. 10 Crore depending on the nature of the property.
- The interest rates is much lower compared to any other personal loan.
- It can be availed for various purpose, like personal or professional need, marriage, property purchase, medical needs, education, or even for business.
- It has a rather low loan processing fee around of 1% of the loan amount.
- LAP can be taken for longer tenure periods of up to 15 years or even more.
- Once the eligibility criteria are met, the further processes is pretty much hassle free.
- Various EMI options are available to the borrowers for easy repayment. Apply for fast loans online.
- The biggest advantage of LAP is that regardless of the type of property being a commercial, residential, or even an empty plot, the applicant can put it up as collateral for a LAP.
Eligibility for Loan against Property
Most of the banks are pretty liberal for the eligibility criteria for the applicant’s property to be kept as collateral for LAP. Compare loans online for best offer. The loan tenure can be for a medium to long tenure 5 – 15 years. The basic requirements by any bank are-
- Applicant should be an Indian National.
- The applicant must be 21 years old at the time of submission of loan application
- The applicant should be working for their current organization or should have been involved in their present business for the particular time specified by the bank.
- The applicant should be earning the minimum income requirement posed by the bank.
- With a good CIBIL score that shows a track record of timely payments of EMI and credit card bill, the added benefit can range from reduced processing time and lower loan against property interest rates.
Interest Rates for Loan against Property
An individual who wishes to apply for a loan can choose between these LAP interest rates –
- Fixed Interest Rate – This rate lies in the 11 – 15% per annum range and remains fixed throughout the loan tenure as they remain unaffected by the loan. This is most beneficial for those who are taking a long term loan. The interest rates that are offered by banks for an LAP generally lie in the range of 11 – 14%, which is much lower than the rates of interest that are offered on personal loans which might range between 12 – 24%, these are unsecured loans that banks consider to be a higher risk.
- Floating Interest Rate – This type of rate is not fixed and will vary with the market conditions. This is most beneficial for short term loans.
The processing fee applicable on an LAP is kept low at about 1% of the total loan amount.
Co-applicant / Joint applicants-
Applying with a co applicant, enhances the eligibility of a loan. One can apply with a co-applicant such as a spouse, relative or parents. Though every bank has its own set of eligibility criteria, NBFCs gives customers better benefits and higher loan value. Check loans online before applying for a LAP.
Prepayment facility for LAP
You apply online or apply for the loan at a branch, if the loan applied for is charged a floating interest rate then there are no prepayment charges applicable on the loaned principal amount.
For loans with a fixed interest rate, the prepayment facility can only be availed after a stipulated time period of minimum 6 months have passed after disbursement of the loan. A small percentage of the remaining principle amount (around 2%) is charged as a prepayment penalty, and usually after 5 years has passed, no prepayment charges are applicable.