Banks and financial institutions offer several loan options. One among them is the loan against property. This is a relatively popular product as it allows people to borrow a large sum of money which would be helpful to them in meeting some of their personal or business needs. Some of the major reasons as to why this loan product is popular are easy documentation, flexible repayment options, and speedy approvals. Read on to know more about the advantages it offers.
Loan Against Property – What Is It
In the case of this loan product offered by banks and financial institutions, you offer a property that you own as collateral and the bank lends you a certain amount of money. The banks often lend a specified percentage depending on the assessed market value of your property.
Generally, banks lend up to 70 percent of the property’s market value of the property. The property you offer as collateral security can be a house occupied by you or one that you have rented out, , or a commercial property owned by you.
As you are mortgaging your property, it is considered as a secured loan.
Loan Against Property – Advantages
- Simple Approval Process – As it is a secured loan, the approval process is very simple. The scrutiny involved is also lighter compared to other types of loan products. If you are borrowing money for business purposes, the quick approval process comes in handy. This is because opportunities do not come often and you must take advantage of as and when they are presented to you.
- Lower Interest Rate – The interest rate applicable for this loan product is lower since it is provided on presentation of collateral security. The advantage is that you can use it for meeting any requirement other than those that involve some kind of speculation. The loan amount can be used for funding your child’s overseas education, a medical emergency, your child’s wedding, your dream vacation, or expansion of your business.
- Flexible Repayment Tenure – This loan product comes with some amount of flexibility in terms of repayment tenure. You can opt for repayment tenure of 10 or 15, or 20 years depending on the amount being borrowed.
- Continued Ownership – You might have borrowed money from a bank by pledging your property, but you continue to enjoy the ownership of mortgaged property.
- Pre-closure- This is by far the biggest advantage offered by the loan against property product. You have the option to close the loan any time after a period specified by the bank. You will not be charged any penalty.
- Optimum Use of Your Property
It helps you unlock the hidden value of your property. You continue to own your property but you can secure a loan at lower interest to meet some of your emergency needs
At Finwizz, we are committed to making loans more accessible to those who are in need. We offer a basket of best loan products from some of the premier banks and financial institutions in the country.