Real estate has garnered significant attention from both prudent and daring investors due to its potential to provide a source of quick liquidity for unexpected financial obligations or substantial expenditures.
But at the same time, selling a property can take a long time, sometimes even years. Instead you can get a loan against the property within days. This way, you can still enjoy the benefits of the property and meet your financial needs.
In this blog, we go over how you can avail of a loan against property in India.
What is a Loan Against Property?
A loan against property is a loan where you pledge one or more properties you own as collateral. It is a type of secured loan, so the loan against property interest rates are usually lower than personal loans, etc.
You can get a loan against residential or commercial property and use this money for personal, educational, or medical expenses, business expansions, buying additional property, and more. Since your property is only collateral, you retain ownership as long as your EMIs are paid on time.
Features of a Loan Against Property
● Different Variants
Banks offer different variants of a loan against property, like a loan for the purchase of commercial property, additional finances, balance transfer, and lease rental discounting. Some banks also allow you to get the loan as an overdraft rather than a term loan.
● Higher Loan Amounts
You can get large sums of loan amounts under such secured loan types. That said, keep in mind that the maximum amount you can borrow from your lender will depend on your profile, eligibility, credit score, age, monthly income, other financial obligations, value and location of the property, etc.
● Loan Term
A loan against property can be long-term or short-term based on your financial situation. Most banks offer tenure of over 20 years, depending on your current age. As a rule of thumb, the maximum tenure a bank would allow for is up to your retirement age. So if you are 45 years old at the time of application and retire at 58, the maximum tenure you can avail of is 13 years.
● Interest Rate
Loan against property interest rates is considerably lower compared to other unsecured loans. Banks usually fix an interest rate range for such loans. The bank decides on your actual interest rate based on your credit history, income, and other factors. So with a good credit score and no other loans or EMIs, you can get large sums of money on your house. Besides, you can repay the loan comfortably thanks to low interest rates.
Who Can Apply?
An individual or a company that holds property to their name can avail of a loan against property. The individual could be salaried or self-employed. The company could be a proprietorship concern, partnership firm, private limited company, or an unlisted and closely held public limited company.
Now, you can apply for a loan against property online by going to your banking partner’s website, filling out the application form, submitting the necessary documents like KYC, income proof, bank statements, and property documents, and paying the processing fee.
Conclusion
If you’re a property owner needing a large amount of money immediately, applying for a loan against property online is the easiest and least expensive way of financing it quickly. With a loan against property, you can leverage your property while still owning it, enjoy the lower interest rates and fulfil your financial needs. Reach out to your bank today to learn more about their loan against property.
