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5 Aspects to Loan Against Property You Must Know

There are many instances in life where money is necessary. Did you know that in such circumstances, you can utilize your immovable property to obtain a loan to cover all of your financial needs? Yes, your property may be able to assist you in times of need. This guide will demonstrate how to obtain loans against any type of property. This includes newly built homes and other commercial properties.

What is a loan against property?

A secured loan provided by banks, home finance companies, and NBFCs is known as a loan against property (LAP) or Property loan and is secured by either commercial or residential property. When opposed to personal loans or business loans, these loans are typically offered at cheaper interest rates. These are disbursed within a fair amount of time. These loans are available to anyone with a pre-owned home. Whether they are salaried employees or self-employed persons working in a commercial or professional environment. Additionally, the loan amount sanctioned is greater than what might be provided by alternative options.

Features of LAP

  • The loan amount may be used however you see fit. You can use it for any need. Such as a sudden medical emergency, paying for your child’s college education or wedding, growing your business, remodeling your home, etc.
  • Lower interest rates: Since the loan is issued in exchange for the property as security, the lender is exposed to less risk. As a result, the lender offers reduced interest rates.
  • Zero to minimum repayment fees: You can pre-close a loan without incurring penalties if you want to pay it off before the term is over. 
  • Simple to obtain: Since it is a secured loan, the risk to the lender is greatly diminished. Even in the worst-case scenario, the lender can still recoup the cost of the loan by selling the pledged property at auction. As a result, lenders are more inclined to provide this kind of loan.
  • Long Tenure: Loans against property are offered for long terms up to 15 years. This is the best option if you want to pay back the loan over a longer period of time with a low EMI.

5 Aspects to Loan Against Property that Applicants Must Know

Loan repayment

Due to the high loan amount that can be obtained against property, it’s crucial that the borrower meets the necessary income requirements to repay the full loan. It can be repaid over a period of 12 months to 20 years, though the term varies from lender to lender.

Property evaluation

Loans against property are given in exchange for collateral, which includes immovable properties like built-in homes or businesses. Before evaluating your loan against property eligibility and amount, your lender will evaluate your property. Not the past or potential future value, but the current fair market value will determine how much is awarded. Housing finance businesses often contribute between 50 and 60 percent of a property’s market value. As a result, you should evaluate the loan-to-value (LTV) ratio that your lender provides.

Ownership of the property

Only after being persuaded that your property has a clear and marketable title will the lender authorize the loan. Additionally, the co-owners must qualify for the loan and be a part of it. 


Any loan against property has a lengthier repayment period than a personal loan. The EMIs have a much lower interest rate and are spread out over a long period of time. Lower EMIs are a result of a longer-term, which eases the burden of the monthly payment. 

Repayment ability

The lender will assess your ability to repay using information from your income statements, repayment history, outstanding debts, etc.

In conclusion, a loan against property provides greater flexibility, cheaper interest rates, a higher loan amount, a longer repayment term, and end-use feasibility. However, it’s vital to keep in mind that if the borrower falls behind on payments, ownership of the property will be given to the lender, making this type of loan a far better long-term option than personal loans.




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