A loan against property (LAP) is one of the popular types of loans in India. It is available to business owners, service providers, and self-employed professionals. You can use this loan to access funds for various purposes ranging from personal to commercial. But are you aware of the advantages of applying for this loan?
This blog explores the top benefits of obtaining this loan. Below is a list of necessary documents and the things to remember before applying for this loan.
What Is a Loan Against Property (LAP)?
A loan against property is a secured loan. You can avail of this loan by offering your property as security or collateral. For this loan, you can use residential and commercial properties as security. You can even offer a mix of commercial and residential properties or land for this purpose.
The amount you can receive as a loan depends on the market value of your property and your lender’s policy.
The best part about this loan is that you can meet your financial obligations while retaining property ownership.
Read on to learn the major benefits of this loan.
Top Benefits of Getting a Loan Against Property
Knowing about the benefits of LAP will enable you to make an informed decision:
Access Funds at a Low-Interest Rate
Since LAP is a secured loan, it offers low risk for lenders, translating into attractive low-interest rates for borrowers. When your loan has a lower interest rate, it results in lower EMIs and reduces your financial burden.
Obtain a Larger Loan Amount
Compared to other loan forms, LAP gives you access to a larger amount of credit since your collateral is valuable. Some financial institutions offer as much as 75% of the mortgaged property value as a loan. You can use this sum to meet any financial necessity in your business or personal life.
Enjoy Longer Repayment Tenure
A loan against property (LAP) offers you the advantage of an extended tenure to repay the loan. Some NBFCs offer a 10-year long period to repay the loan. When you opt for an extended loan tenure, your EMI comes down, helping you repay your loan without feeling financially overburdened.
You can use an online lap eligibility calculator to know your EMI in advance.
Continue to Use Your Property
When you opt for LAP, you can continue using your mortgage property, making it easier to mortgage any property, even self-occupied houses or rented-out commercial spaces. You don’t have to surrender your right to ownership.
Get Quick Loan Approval
The process to obtain this loan is quite simple and fast. Since you are offering collateral, it becomes easy to get the loan.
Remember to check the eligibility criteria set by your lender for the loan. Also, keep the relevant documents ready before applying for this loan.
Documents Needed for a Loan Against Property
For LAP, you will need to submit certain documents. The broad categories of these documents are mentioned below. Keep in mind that your lender may ask for some more documents:
· Application Form
· Proof of Identity
· Proof of Address
· Proof of Income
· Property-related documents
Things to Remember Before Obtaining a Loan Against Property
Here are a few things to remember before submitting your application for LAP:
Evaluate the Market Value of Your Property
As mentioned, you can get a certain percentage of the mortgaged property value as a loan, making it essential to be aware of the value of your property before applying for the loan. It will give you an idea of the loan amount you can expect.
Check the Eligibility Criteria of the Lender
The eligibility criteria can differ from one lender to another. So, you must check the eligibility criteria of your lender before applying. It will minimize the chances of your application getting rejected.
Analyse the Repayment Tenure and EMIs
Opting for a long tenure will help you to lower your EMIs. By using an online lap eligibility calculator, you can easily determine the tenure you need for an affordable EMI. Just enter the loan details, and you can get the result instantly.
Be Aware of the Processing Fee and Other Charges
When you apply for LAP, you may have to pay certain charges. These can include processing fees, legal fees, etc. Be aware of all such charges so that you can determine the real cost of your loan.
Applying for LAP is an effective way to obtain finances for your long and short-term requirements. You can get this loan from reliable lenders at an attractive low-interest rate if you research properly. If you need a large amount of credit, you can consider this loan to meet your needs easily.