Loan against property – Attractive option for business growth
Loan against property is a secured loan that you can avail by collating your property as a guarantor. Ownership rights remain with the borrower till the tenure of the loan against property. However, lender can sell the property to realize the loan amount in case the borrower is unable to repay the loan amount. These long term loans are widely used to start a new venture, expand an existing business or even to repay an existing loan with high rate of interest.
Properties that are on lease or mortgaged on the basis of power of attorney usually do not qualify to be collateral for loan against property. The loan amount could vary from 50 % to 60% of the market worth of the pledged property, depending upon whether it is a commercial property or residential.
Maximum tenure for loan against property is 15 years, and individuals under 60 years of age are eligible to apply for the same. Interest rate may vary from 6 % to 8 %, depending upon the bank’s criteria, and the sanctioned amount may vary from Rs. 2 lacs to Rs. one crore. One can repay the entire loan amount after 180 days, but pre-payment charges will belevied for the same. Clarify from your bank about the pre-payment charges (these usually vary between 2 to 3 percent) and ask if they can offer you some waiver on the same.
If you can stand at least three family members or business partners as guarantors for your loan against property, you can increase your eligibility criteria and hence avail significantly larger amount of loan.
Important points to keep in mind
Compare loans against property offers of few banks and opt for the one that is most profitable and suitable for your needs.
Recheck all terms and conditions carefully before signing any document.
Try not to default in payment of your EMIs. Besides being penalized, you will also run the risk of harming your credit history, which will adversely affect your future prospects of getting loans against property.
Ask your bank about the cost of processing fees. Some banks may waive your processing fee but would work out for it in their repayment plan.
Finally, try to repay your loan amount at the earliest possible. Sooner you clear off your debt, lesser you will have to repay in terms of interest.
Loans Bazaar offers loan against property at attractive terms. Apply now to avail the benefits of our loan against property deals.