People often apply for loans when there is a need for the sudden inflow of cash to meet a medical expense, pay-off another loan, pay education fees, and more. Applying for a loan does not necessitate that it would be approved. It is wise to remember that the approval rate for unsecured loans is lower in comparison to the approval rate for secured loans. Therefore, if you are planning to use collateral or security to get a loan, the chances of you getting the loan amount you need are higher.
Taking a loan against property
Not many people are aware that they can take a loan against propertyto ensure the necessary cash inflow. These loans can be taken against a self-occupied residence, freehold plot or building used for commercial purposes. Banks and financial institutions assure that not only these kinds of loans have lower interest charges but can be repaid over different loan tenures as the loan repayment period usually ranges from five to 15 years.
If you have a property that can be offered as security, you can easily secure a loan against it. It serves best for those people yearning for personal loans- they are often afraid to apply for one owing to high-interest rates. Keeping the property as collateral to secure loans also serves best for those looking for large business loans which are unable due to rejection of maybe, a loan application. The best part is that some lenders also extend an overdraft facility against the property secured.
The many benefits of taking a loan against property
The above are some of the reasons for taking a loan. Mentioned below are the multiple benefits of taking a loan against property.
- Myriad Uses: Lenders do not question the purpose for which you are seeking the loan. It means that you can use the loan amount credited to your account for practically any purpose just like personal loans. After all, availing finance when it is most required with property is indeed one important uses you can make of the property bought. However, many lenders might not be ready to finance an amount that is than 60 percent of the property’s market value. Knowing the quantum of loan that is likely to be sanctioned before filling out the application process is a good idea.
- Low Interest: As mentioned above, compared to other loans, the interest rates on a loan against property are much lower. While personal loans range from 12 per cent to 16 per cent per annum, the interest rate on loan against property is somewhere between 10 per cent and 15 per cent. Moreover, borrowers can choose from two kinds of rates, including the fixed interest rate and reducing balance method.
- Long repayment period: You can repay the loan amount taken against property in five to 15 years. Such a long tenure ensures that you have enough time in your hands to repay the entire loan amount.
- Affordable EMIs: Since interest rates are low and the loan tenure comparatively high, the EMIs become are affordable for most borrowers. Before applying for a loan, you must always use the loan against property EMI calculator available online to estimate the amount that you have to pay to the lender every month. Please do remember that if you miss even one EMI payment, a penalty is chargeable and hence, you should carefully plan the EMI before signing on the dotted line.
- Easy availability: These kinds of loans are easily available due to their secured nature. The property secured can be of any type including flats, residential plots, penthouses, shops or commercially owned lands. However, those looking to finance new business enterprises cannot avail this loan. Besides, the property in question must be at least three years old. Salaried people who have been employed for more than a year can avail this kind of loan. Another important factor for you to remember is that you should be the owner of the property, and if there are two or more owners, then all owners need to be co-borrowers to the loan.
- Loan refinancing: If you are a businessman and continuously on the lookout for money to expand your business, these kinds of loans can serve as an excellent refinancing option. It means that the same property can be reused to secure a greater loan amount, thus, helping building businesses.
Many people are often in two minds about using a self-owned property as collateral while applying for a loan. But the above reasons should be enough to convince you that a loan against property is one of the most affordable and easily available loans. “
