Types of Collateral Properties for a Loan Against Property

Understanding the Types of Collateral Properties

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Types of Collateral Properties for a Loan Against Property_WC

4 min 26 Dec 2024

Highlights:

Types of Properties that can be Pledged as a Collateral
Eligibility Criteria for a Collateral Property
Benefits of a Loan Against Property

When you apply for a secured loan, such as a Loan Against Property, you will have to pledge a property you own as collateral. Collateral property refers to the property pledged with the lender to secure a loan. In this article, we will delve into what collateral property means, its types, and how it can help you secure a loan.

Types of Properties that Can be Used as a Collateral

The types of properties accepted as a collateral may vary based on your lender. Typically, the following immovable collateral properties can be pledged to secure loans against them:

Residential Property:

You can mortgage any residential property, such as an apartment or a flat, you own as a collateral to avail of a Loan Against Property. These properties can either be self-occupied or rented out to a tenant.
Commercial Property:

Commercial property, including office spaces, shops, and retail outlets, are also widely accepted as collaterals when applying for a loan against property.
Industrial Property:

Warehouses or manufacturing units are some of the industrial assets that can be pledged as a collateral property.
Co-Owned Property:

Co-owned properties can also be considered as collateral properties to secure a loan, provided certain conditions are met. If the property is jointly owned by family members, it can serve as a security. However, all co-owners need to give their consent to mortgage the property.
Vacant Plot or Agricultural Land:

Non-agricultural vacant land or plots or agricultural land can be accepted as collateral properties, subject to the policies determined by the lender.

Eligibility Criteria for a Collateral Property

Before pledging a property as a collateral, it is essential to ensure that it meets the eligibility requirements of the lender. Some of the common criteria include:

Clear Title: The property must have a clear title, that is, it should be free from any legal disputes.
Ownership: You should be the legal owner of the property that you wish to mortgage. In the case of a co-owner, the consent of all co-owners is required.

Benefits of a Loan Against Property

Pledging a property as a collateral when availing of a Loan Against Property can offer several benefits such as:

Long Repayment Tenure:

You can benefit from a flexible repayment tenure of up to 17 years, which can ensure convenient EMIs.

Sizeable Loan Amount:

Based on the value of your property, you can be eligible to secure a high-value loan.

Competitive Interest Rate:

A secured loan, as compared to an unsecured loan, typically comes with a lower interest rate, ensuring that your cost of borrowing remains manageable.

Also Read: Things to Know Before Applying for Loan Against Property

Conclusion

Whether you are leveraging a residential property or commercial space, a Loan Against Property can be a convenient financial option to unlock the true potential of your property at favourable loan terms. Leverage your property to expand your business with a Loan Against Property from Bajaj Housing Finance.

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