Understanding All the Charges on Your Loan Against Property

A Loan Against Property (LAP) is a secured financing option that enables you to access substantial funds at a competitive interest rate with a flexible repayment tenor. It also offers the advantage of quick approval and disbursal, making it a reliable financing solution for urgent business or housing requirements. However, understanding all the fees and charges associated with a Loan Against Property is necessary to accurately assess the total cost of borrowing. 

This article provides a detailed overview of the charges involved in availing of a Loan Against Property.  

Processing Fee 

Once you make an application for a Loan Against Property, your lender will perform a background check. This will typically include verifying the documents as well as assessing your credit score and report to understand your repayment capacity before processing the loan amount. Lenders may charge a one-time fee known as the processing fee, which is a percentage of the total loan amount. It should be noted that this fee may vary based on the lender.  

Part-Prepayment and Foreclosure Charges 

If you wish to utilise your salary hikes or bonuses to reduce your principal loan amount, you can do so through part-prepayments. A part-prepayment is the process of paying a lumpsum portion of the balance loan amount, over and above the regular EMIs. When you opt for this, you may have to pay a part-prepayment charge which may vary based on your lender. Likewise, a foreclosure fee may be applicable if the entire balance loan amount is repaid before the completion of the loan tenor. 

Penal Charges  

When managing a Loan Against Property, certain charges such as bounce charges or late payment fees may apply under specific circumstances. A bounce charge is imposed when an EMI payment is unsuccessful due to insufficient funds or issues with the payment method. Similarly, a late payment charge is applied when an EMI is not paid on or before the due date. 

Read Also: Loan Against Property Fees and Charges 

Conclusion 

Understanding the various fees and charges associated with a Loan Against Property is important to assess its total cost. From processing fees to part-prepayment and penal charges, being well-informed can help you plan better and manage repayments effectively.