Loan against Property, as the name itself implies is a loan given against the mortgage of a property. The loan is disbursed as a certain percentage of the market value of the property pledged, usually around 50-60%.
Why a Loan against Property?
Even in case one is a meticulous saver, at times his finances may be strained and he may seek a little help to tide him over. Though personal loans are a preferred option for many, a better option would be to leverage an owned asset- your house.
An owned house can be used as collateral for taking a loan from a bank. The latter exercises due diligence as far as the house is concerned, appraise its market value and offers up to 70% of its assessed value as a loan. Owing to the fact that collateral is being offered, a loan against property is considered as a secured loan and thus, a borrower gets a higher loan amount that the one he would have got for any unsecured loan like a personal loan.
The only loan that is less expensive that a loan against property is a home loan.
Which properties are eligible for a loan against property?
A loan against property can be availed against a residential as well as commercial property, be it self-occupied or rented. This may be constructed or even a plot of land.
For what purposes can a Loan against Property be availed?
A loan against property can be taken for the below listed purposes:
» Business Expansion
» Child’s higher education
» Child’s marriage
» Funding vacation
» Funding Medical Treatments