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FEW POINTS TO BE CONSIDER BEFORE TAKING A LOAN AGAINST PROPERTY

 

Owning a property gives you numerous benefits as residential property will give you the feeling of proud living in your own house where as commercial property turn into a permanent source of income. Well, not to get surprised, you can also use the property as loan collateral during an urgent need of money by securing loan against property.  A loan against property is a budget-friendly way to avail funds by putting your priced property as a security to lender. One must not forget about the danger of liquefying their priced property as default on EMIs ay make the lender to sell your property to refund the loan. Here, we will focus on few points to consider before taking a loan against property as it is seen that LAP is a cheaper financial product but a risk is associated while applying for the same.


Points to Consider While Taking a Loan against Property

 
    Rate of Interest: The rate of interest on LAP ranges from 10-14% and can differ from lender to lender. One has to do a proper research to find the lender who offers the loan at low cost. If you are taking it for buying a new home or to fund your child’s education, then taking a home loan or education loan is a wise decision. An individual should opt LAP only when it is the cheapest option available for you.


    Loan Quantum: The loan money which you will get as credit depends upon the market value of the property. One can get up to 70% of market value of the property as loan. One can check with many lenders to find the highest possible loan quantum. If you feel that offered loan money is not sufficient to fulfill your need then do not "Apply For Loan Against Property" to put your priced property at risk.


    Loan Tenure: The tenure for loan against property can be as long as 10-15 years which makes the monthly installments much smaller which increase the loan affordability. However, it is fact that a longer tenure increases the cost of borrowing as the total outgo of the loan as interest is calculated on a compounded way, so choose the tenure carefully.


    Processing Charges: The loan comes at processing charge up to 3% of the loan amount plus service tax. Consider all the charges while calculating the total loan cost to find out the actual amount which he/she is paying to avail the funds.


    Zero Tax Benefits: If you apply for a home loan or study loan, you can enjoy a tax benefit under section 24b and 80c but, a loan against property does not attract any tax benefit to the borrower. The amount which you use to repay your loan will be considered as your taxable income, so take a wise decision and do a proper research by comparing lenders as most of the lending institutions offering an "Online Loan Against Property" as per your convenience.

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