As the name suggests, a loan against property is a type of loan where a borrower can leverage his commercial, residential, or immovable property to acquire funds in lieu of it. A loan against property is a secure loan and the funds availed here can be used for any type of financial emergency, be it for business, personal or medical purposes. This credit tool is popular among borrowers due to its distinct features and benefits. Let us discuss them here.

Features and Benefits of Loan Against Property

Lower Interest Rate: As a loan against property is a secure loan and when compared to unsecured loans, it typically has a lower interest rate. Also, if you have a good credit/CIBIL score and credit history your chances of getting a low interest loan increases.

Higher Loan Value: Here the loan amount depends on the registered value of the property pledged as collateral. Most banks and financial companies sanction 40% to 60% of such loans based on the property’s condition and age. So, a property located in a prime area, with good amenities in good condition can fetch a higher loan value than other loans.

Simple Documentation and Approval Process: When it comes to avail loan against property, the process here is simple. Here the property used to secure the loan serves as collateral and this enables lenders to proceed with a simple documentation process.

Flexibility In Loan Repayment: Again, as it is a secure loan, borrowers can avail of a flexible loan repayment term. Depending on the lender you choose and your relationship with them, you may be able to get a loan repayment term of up to 20 years.

Ownership of The Property Remains with Borrower: In a loan against property, the borrower retains ownership of the property that is used as collateral. This means that the ownership of your property does not change when you offer it as collateral for the loan. This gives the borrower the option of selling the property if they are unable to repay the loan.

Pre-Closure Option: You can pre-close your loan against the property if you want to do so. For loans carrying a variable interest rate, you will not be required to pay any pre-closure penalties. If your loan has a fixed interest rate, you may need to pay a small amount of the preclosure fee.

Optimal Property Utilization: If you obtain a loan and have a property you offer as collateral, you can meet your financial needs with a loan amount almost equal to the value of the property. You can do the same while keeping your property. This means you can choose not to sell your property and still get enough money to meet your needs at a low interest rate.

Summing Up

Thus, with many players in the market offering a loan against property, it is best to select a lender who can help to customize this loan according to your needs. This will helps you avail the loan easily as well as repay it with ease and comfort.