5 Reasons to Opt for a Loan Against Property to Start Your Own Business

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2 min 10 Feb 2023

Reasons to Opt for Loan Against Property

Highlights

Reasons to Choose Loan Against Property to Start a Business

Not everyone wants to live the routine life, not everyone feels happy slogging 10 hours in an office. Some people enjoy working for themselves, they dream of creating things and products they will be remembered for. Unfortunately, setting up one's own business is no easy task - a great idea is a must, but you also need working capital to ensure your idea reaches people. 

If you need funds to enter the world of entrepreneurship, a Loan Against Property can help you realize your dreams. 

A Loan Against Property is a type of secured loan under which a borrower pledges their property as collateral. This property could be commercial or residential or even a piece of land that you own. The property pledged must have a clear title and should be free of disputes. The lender will assess the value of your property and sanction anywhere between 60% to 70% of the property's market value as a loan. Like in the case of any other loan, once the loan tenure begins, you will repay the loan in the form of EMIs. However, you will get ample time due to the a long repayment tenure associated with Loans Against Property to repay the loan, making the whole process easier and completely stress-free. 

The question is, when there are so many loans options available in the market, why should one opt for a loan against property for business growth. Let us look at 5 reasons why this loan tool is the ideal choice for aspiring entrepreneurs.

5 Reasons You Should Choose Loan Against Property to Start Your Own Business

1. Low Interest Rates

Loans Against Property are secured loans. They involve collateral and therefore, the risk involved for the lender in lending the borrower money is quite low as the lender can sell the property for loan recovery. Lenders, therefore, sanction these very low loans at low-interest rates starting at 9.30%* p.a. for good credit scores. In fact, Loans Against Property are the second cheapest loans after Home Loans. On the other hand, loans, such as gold loans and personal loans, draw a very high rate of interest and are, therefore, not a feasible or affordable choice for anyone starting a new business. 

2. Long Repayment Tenure 

Most unsecured loans must be repaid over a period of 5 to 7 years. Such a short tenure leads to high EMIs, leading to the loan becoming unaffordable for the borrower. Loans Against Property come with a long repayment tenure stretching up to 15 years. Thus, a borrower can even avail of a hefty sum and pay it off slowly in the form of small, affordable EMIs.

Also Read: Pick the Right Loan Against Property Tenure

3. Substantial Loan Amount

Starting your own business means you must have access to a decent amount of money. While a personal loan will give you immediate access to a small sum falling in the range of Rs.15 to Rs.25 Lakh, it is quite likely that this money won't be enough to take care of your needs. Under a Loan Against Property, lenders offer 60% to 70% of a property's value as a loan. As an example, if the property you are pledging as collateral is valued at Rs.1 Crore, you will easily get access to anywhere between Rs.60 Lakh to Rs.70 Lakh as a loan. Thus, under Loans Against Property, borrowers can get access to a much higher sum. In fact, with a lender like Bajaj Housing Finance, one can get access to a sum as high as Rs.5 Crore* or more, based on eligibility.

4. Quick Approval and Continued Usage of Property 

When it comes to Loans Against Property, lenders are quite cautious about who they are lending money to. They take their time to check whether the property being pledged as collateral has a free lien and is free of any kind of dispute. Thus, when you apply for a Loans Against Property, your lender will hire a legal expert to check the property being pledged as well as assess its value. These things take time, but lenders try their best to wrap up the whole process within a week or two. In fact, there are some lenders in the market who sanction and disburse loans within 72 hours* of document submission and approval. So, if you need money urgently, you can go to a lender known for speedy approval.

Yet another reason why you should take a loan against property to take care of your business needs is that a LAP allows a borrower to unlock the value locked in a property while giving them full rights to continue using the property as they like. In other words, you can still inhabit your home or rent out the shop against which you have taken a loan.

5. It's Safe and Convenient 

Lastly, you should opt for a Loan Against Property because these loans are safe and convenient. Though they involve collateral, your lender has no rights over your property if you continue to pay your EMIs on time. However, since Loans Against Property involve collateral, borrowers must borrow these loans after proper financial planning and borrow only as much as they can easily repay.

Final Words

 If you are someone who dreams of starting their own venture but lacks the funds to do so, a Loan Against Property can be the answer to all your problems.

Also Read: Why Loan Against Property can be a Good Credit Option for a Startup Business?

*Terms and conditions apply.

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