A loan against property (LAP) allows you to pledge your property as a security and borrow money from banks and other financial institutions. You can use your property to generate funds, repay the same loan with interest, and get your property papers back. It is a secured loan, so getting the disbursal is quick and easy with minimum documentation.
You can quickly get this loan if your credit score is good, and you have not delayed or defaulted on your past repayments. Sometimes, these loans are also pre-approved for customers with clean financial records. With a flexible tenure – as long as 20 years or more – you can repay the loan in EMIs without difficulty. Another benefit of this loan is that you can continue to enjoy your property so long as you don’t default. The ownership does not change, and when you completely pay off your loan, the lender gives you the property registration papers along with a NOC.
You can also opt for the pre-closure of this loan if you have surplus funds. If you take the loan on floating rates, you also don’t need to pay any pre-closure charges. Secured loans come with affordable interest rates. Also, your income and good credit score can help you borrow more at cheaper interest rates.
One of the most important things to remember before applying for a loan against property is that your property should be legal without a dispute on it, it should have all approvals in place, and you should be the property owner. Remembering some critical factors before taking a loan against property would be best.
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Tenure of the Loan
The loan tenure determines the interest rate. The higher the tenure, the higher your interest will be. Always try to go for a shorter repayment tenure.
Your Credit Score
Your credit score is vital in helping you borrow at a cheaper interest rate. You can negotiate with the bank for attractive interest rates if you have a credit score of 750 and above.
Your property’s market value determines the interest rates and how quickly the bank disburses your loan. If your property is government approved, it is easier to avail of the loan.
Also Read: Public Provident Fund: Can you invest more than Rs 150,000 in your PPF account?
Besides documents and property, the borrower’s age, income, job etc., also determine the interest rate and help borrow the money quickly.
Interest Rates & EMI on Loan Against Property
EMI on Loan Against Property of Rs 15 Lakh for 7-year Tenure
Compiled by BankBazaar.com
Note: Interest rate on Loan Against Residential Property (LAP) for all listed (BSE