A loan against property (LAP), also known as a secured loan, is useful for availing of huge funds by mortgaging one’s property as collateral. Banks and financial corporations lend huge loan amounts under LAP schemes at a lower interest rate, which makes the loan against property a popular credit option in Coimbatore. The loan amount depends on multiple factors, such as the age and value of the property, credit score and credit history of the borrower, source of income, interest rate, loan tenor, and others. The loan amount granted is around 60 to 80 percent of the value of the property, ranging up to Rs.25 crore. LAP can be availed for various uses, such as expanding one's business, undertaking a home renovation project, and meeting a range of financial expenses, such as marriage, education, or medical needs, etc.
The lower rate of interest and longer loan tenor attracts borrowers in Coimbatore to avail of loan against property for emergency financial needs. The longer tenor helps in keeping the EMIs on the lower side, which does not upset the monthly budget of the borrower while repaying. The other benefits of LAP are provided below:
Lenders accept various types of property as collateral for granting loans against property. Any self-occupied, rented or empty residential property; self-occupied, rented, or empty commercial property; marriage halls; malls; and others are eligible for loan mortgage. However, agricultural plots of land and residential property on agricultural lands are not eligible for collateral.
Most lenders provide facilities, such as top-up and Loan Against Property balance transfer to attract borrowers, for LAP. This facility allows the borrowers to transfer the outstanding loan amount to a new lender for a lower rate of interest or change their interest rate schemes with the existing lender.
There are no prepayment charges on loan against property availed of at the floating rate of interest. For the fixed rate of interest, the foreclosure penalty is nominal depending on the lenders’ terms and conditions.
The borrowers do not lose ownership rights even after mortgaging their property. The property remains in the personal usage of the borrower (either self-use or rented) throughout the loan tenure.
Any Indian citizen who is above 21 years of age and has a real estate property in India along with a stable income is eligible for LAP.
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Last update on 11-Mar-2021
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