Loan against property has witnessed significant growth at a CAGR of 14% by FY2026. The meteoric rise and demand for loan against property can be attributed to the availability of high-value loan amount at competitive interest rates.
Moreover, individuals have the opportunity to utilise the fund to meet an array of expenses like education, medical costs, business expansion, debt consolidation, etc. Therefore, to comprehend the reasons behind the popularity of this financial product, one needs to understand its benefits.
Know how loan against property is increasing opportunities
There are multiple reasons contributing to the rising demand for a loan against property –
- High loan quantum: Accessibility of high-value loan amounts is the primary cause behind the increasing demand for LAPs. As the credit amount is measured against the market value of a property, borrowers will get access to a considerable sum.
- Easy loan approval and simple documentation: Being a secured loan type, the eligibility and documentation for a LAP are less stringent when stacked against various unsecured loans.
- Competitive interest rate: The rate of interest charged on a secured loan option is lower than other unsecured loan options. This is another reason why a property loan is considered a viable option. A lower interest rate translates to lower EMI payments which bring down the cost of borrowing.
- Longer repayment tenor: Under loan against property, borrowers can repay loan amount for an extended timeframe. Pliable repayment tenor helps borrowers to plan EMI repayment accordingly. Longer repayment tenor coupled with nominal interest rate makes borrowing efficient and affordable.
- No end-use restriction: This is perhaps one of the significant reasons behind the escalating demands and opportunities of a LAP. Borrowers can use the sanctioned amount to meet any financial expenses. They are not liable to show usage of the fund to the respective lenders. For instance, individuals trying to start a venture under the PMRY scheme can alternatively opt for this credit instrument if they have a further requirement of funds.
- Loan against property balance transfer facility: Loan against property allows borrowers to refinance their existing loan balance to a new lender offering lower interest rates and better loan terms, thereby helping them to lower their borrowing expenses.
Furthermore, borrowers willing to close their loan account by making prepayments are not liable to pay any prepayment charges if they opt for a floating interest rate. Also, borrowers can reap the tax benefit under loan against property and claim tax exemption on the interest payments only if they use the fund for specific purposes.
To enjoy these benefits of a LAP, individuals must know the application process of the same.
How to apply for a loan against property?
Borrowers have to follow the steps mentioned below to avail of a property loan:
Step 1: Firstly, visit the official website of a lender of preference
Step 2: Now head to product page and choose loan against property
Step 3: Click on the application form and fill it with personal, property and income details
On submitting, a representative from the lending institution will contact the applicant and carry forward the lending process.
However, prospective borrowers must meet loan against property eligibility criteria to receive instant approval for loan application.
Eligibility parameters of a LAP
Since the eligibility requirements of a LAP alter with the selection of lender, individuals need to meet specific criteria to qualify for this financial product. Nonetheless, here are some common parameters that remain similar –
- Age: 25 to 70 years
- Employment status: Both salaried and self-employed individuals
- Monthly income: Varies depending on an applicant’s city of residence
- Credit score: At least 750
Apart from getting substantial loan principal at an affordable interest rate, borrowers can also avail of pre-approved offers extended by leading financial institutions on financial products like loan against property, home loans etc. These offers streamline the loan application procedure and save time. Individuals can check their pre-approved offers by entering their name and contact number.
To sum up, a loan against property serves as an effective source of financial assistance to a significant portion of the population. Borrowers can derive considerable funds from the property pledged as security still being the lawful owner of it. Moreover, the attainability of a high quantum loan at a low-interest rate by meeting simple eligibility criteria helps one dodge financial setbacks.
