LOAN AGAINST PROPERTY SIMPLIFIED

Built up an asset? Here’s how you can make it work in an emergency?

The road towards owing a houses of your own is usually paved by scarifies and financial discipline. The sacrifices could have involved rising the down payment by breaking investments or taking a loan from your provident fund, which, if left untouched, would have yielded higher returns on maturity. The discipline would have come in through rigorous financial planning; possibly from the day you stated earning.

So what do you do in an emergency? By their very nature, emergencies come without warning. How would you raise money then? A loan against your property is you best bet.

1 WHAT IS A LOAN AGAINST PROPERTY (LAP)?

It is a loan given against the mortgage of your existing property. Lending institutions will typically give you anywhere between 10-60 per cent of the market value of the property as a loan subject to your repayment capacity. Certain instructions give even up to Rs. 3 crore as loan against property.

2 WHY TAKE LOAN AGAINST PROPERTY?

Although personal loans are unsecured loans and no mortgages are necessary, they come at a cost – an interest rate of 16-25 per cent per annum. The maximum tenure of personal loans is not more than 5 years with a flat rate of interest. On the other hand, loans against property come at a 12-14 per cent reducing rate of interest. The tenure for a loan against property is up to 15 years. The reason for the lower cost is that the property serves as security for the leading institution.

There is also the “There Is No Alternative (TINA)” factor: Buying a house is a substantial financial investment. Chances are that in various asset classes, to buy your house. So, now if u need money the loan against property is your only option for affordable credit.