Loan against property vs. Personal loan
What is a loan against property?
A loan against property (LAP) is
exactly what the name implies - a loan given or disbursed against the mortgage
of property. The loan is given as a certain percentage of the property’s market
value, usually around 40% - 60%. Loan against Property belongs to the secured
loan category where the borrower gives a guarantee by using his property as
security.
What purposes can I take a loan
against property for?
Loan against Property can be taken
for following purposes:
- Expanding your business
- Getting your son/daughter married
- Sending your son/daughter for higher studies abroad
- Funding your dream vacation
- Funding medical treatments
What kind of properties can I
mortgage for a loan?
You can normally take a loan against
your self-occupied or rented residential property. This could be a house or
even a piece of land.
What is the eligibility criteria to
get a loan against property?
This criteria will vary from one
bank to another. However, from all the host of factors, the common factors that
all banks look at are:
- Your income, savings, debt obligations
- Cost/value of the property mortgaged
- Your repayment track record for other loans, credit
cards etc.
What are the normal interest rates
and tenure for repayment offered for a loan against property?
Interest rates on loan against
property range from 12% -15.75% and the loan tenure can be up to 15 years.
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