There are
times when you can be in a situation when you might have to borrow money but do
not know how to get it. In such a financial crisis, if you own a property you
can very easily get a Loan against Property.
This will not only ease your monetary emergency but also give you a long span
of time to repay the amount, which can be between 5 and 15 years. While applying for a Loan against Property (LAP) ensures that there are no other
impediments or loans against the said property. The loan amount sanctioned for
the property is generally between 50% and 60% of the market value.
Benefits
of Loan against Property:
1. Low Interest Rate: Compared to other loans the interest rate for
LAP i.e. Loan against Property is
comparatively low, ranging between 12% and 15 %.
2. No Prepayment Fee: Unlike other loan
accounts, you can close the loan account before completion of the term. Banks
rarely charge any prepayment fee and even if they do it is minimal.
3. Easy
to Secure: Getting a loan sanctioned can be quite a challenge, but with LAP
it is easy as you are offering your property as collateral.
4· Long Repayment Period: Tenure for LAP
is long compared to other loans like personal loans. This gives you a long time
for closure.
5. EMI is Low: In LAP the EMI is inversely
proportionate to the tenure, i.e. the longer the tenure period the lower is the
EMI.
Disadvantages
of Loan against Property:
1. Amount of Loan not Specified:
The bank analyses property and real estate market before finalizing the amount,
so you cannot be sure about the amount.
2. Property Value is Lowered: The bank
lowers the property value while sanctioning the loan amount.
3. Property can be Auctioned: If you fail
to do the repayments as per the terms set and cannot close the loan amount the
lender can auction the property to recover the amount.
If
the benefits and the disadvantages of the LAP are considered it becomes obvious
that pros are in favor than cons. Next time you are in a massive financial fix
think of Loan against Property-ArtworksMoney.
