Loan Against Property: Loans have become a better way of arranging money to meet any kind of need. There are many types of loans available in the market, such as – Personal Loan, Gold Loan, Wedding Loan, etc. Similarly, you can also take a loan against your property. It is also called Loan Against Property (LAP). Under Loan Against Property, you can borrow a large amount against your property. It is a secured loan that can be availed for various purposes such as medical emergency, child’s education, business related purposes, weddings or other personal needs.
Most of the banks offer this type of loan for a large amount. Generally, the loan amount sanctioned by banks depends on the income of the borrower so that the EMI payment to the borrower does not exceed 60 percent of his monthly income. While applying for Loan Against Property, it is very important to keep some things in mind, which we are going to tell you here.
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Important things to keep in mind while taking loan against property
- Banks check the payment-track record, repayment capacity of the borrower, etc. before sanctioning the loan. Hence, if one has other loans or current liabilities, his/her eligibility for another loan is reduced.
- Apart from this, some banks also take into account the number of dependents on the borrower. It is believed that if you have more dependents then it means that your repayment capacity is less.
- Experts say that borrowers should compare them before choosing a lender for their LAP, as these are larger loans and have longer tenures. The research should not only compare interest rates, but also take into account other parameters such as foreclosure charges, processing fees, pre-payment charges, late payment penalty and loan to value ratio.
- Take as much loan as you need, as it may happen that the loan defaults and you may lose the property against which you have taken the loan.
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- Keep in mind that if the property against which you are going to buy the loan is in dispute, your loan request may get rejected. Banks do not accept loan requests if the property related to the loan is in dispute or the property documents are not clear.
- Generally, these loans are available for longer tenures up to 15 years and with speedy approval, flexible repayment options, documentation for Loan Against Property is easier than others.
- The loan can range from Rs 5 lakh to Rs 500 crore, and the tenure can go up to 15 years. The loan to value (LTV) ratio generally ranges from 50-60 per cent of the market value of the property.
- There is no tax benefit in Loan Against Property.
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