It would be no exaggeration to say that life is highly uncertain and no matter how much you plan, you are not entirely sure of what life would unfold the very next minute. While it is good to plan your future and make realistic financial budgets, the fact is that it will only remain a budget and there can be a wide variance from the actuals. Of course, it doesn’t happen all the time.
Most often, if you are financially literate and keep your spending under check, you may stay within your budget, but there can be those few instances when medical emergencies, travel or higher education requirements may be things you couldn’t have planned for and making quick arrangements of funds may seem overwhelming. This is when taking a financial advance like a loan can be very helpful in the time of dire need. However, one of the most common reasons for seeking funding is starting or expanding a business.
What are your financing options?
When you are in need of immediate money, the only viable option for you is to take a loan. There can be different types of loans that you can opt for, with the most common one being a Personal Loan. Different types of loans have their own set of guidelines and payment terms. A lot of times, your loan approval will depend on your eligibility. This implies that you may or may not be eligible for every type of loan.
Among other types of loans is Loan Against Property, which is considered to be among the most common and feasible options of financing for those who have an asset on their name.
What is LAP?
As the name implies, a Loan Against Property (LAP) is a loan that is disbursed against property. This property can be a freehold land or a house. This is a form of a secured loan which is approved to about 50% to 90% of the property value. This means if you have a property that is valued by an appraiser at Rs. 50 Lakhs, you can easily get a loan of around Rs. 20 to Rs. 30 Lakhs on it. Of course, the actual amount of loan that you are eligible for will depend on other factors such as your credit rating, your payback capacity, your monthly income, and so forth.
For which purposes can you take a Loan Against Property?
Loan against your property is the most appropriate kind of a loan for a variety of purposes. Banks and other financial institutions are in more favour of approving such loans as there is a property that acts as collateral and hence, there is lesser risk associated with this type of funding. That being said, you can Apply for Loan Against Property for medical emergencies, wedding related expenses, higher education or for business start-up, growth or expansion. You can also apply for a LAP for the property renovation. Also, this loan can be applicable to a self-occupied house, rented property or even a plot of land.
Are you eligible for LAP?
Different banks have different criteria to approve a LAP. If you are wondering – where can I get a Loan Against Property, MyMoneyMantra, a leading online lending marketplace can help you get access to more than 60+ banks and NBFCs (Non-Banking Financial Companies). The most common requirements for being considered eligible for a Loan Against Property are as follows:
- A salaried professional who has the payment capacity through his monthly salary can apply.
- Tax-paying self-employed individuals can apply.
- Business owners who have the verified documentation.
- Individuals who have a high credit rating.
Difference between LAP and secured Personal Loan
There are two Types of Personal Loans in terms of security – secured loan and unsecured loan. A secured loan has associated collateral, which could be any of your assets such as a car, and so forth. The unsecured loan, on the other hand, has no associated collateral. As there is more risk involved with an unsecured loan, the rate of interest is typically higher that LAP or any other form of loan.
LAP is also a form of secured loan wherein your property stands as the collateral. However, it is considered to be better because the value of property rarely depreciates. This is the reason why a LAP will have a lower interest rate than any secured loan that is taken against any other type of asset.
Loan Against Property is a more popular option primarily because of its low-interest rate. Also, there are fewer formalities that have to be met to be eligible to get a LAP. Also, the timeline to payback is usually longer for a LAP, which can be for 15 to 20 years whereas for Personal Loans, it is usually 5 to 8 years.
If you are looking to apply for Loan Against Property or you would like more information, connect with the financial experts at MyMoneyMantra. They will help you understand the nitty-gritty and help you find the best possible loan option for your needs.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.