In case you want funds the way out is to apply for a personal loan from a financial institute like a bank. It is not difficult to procure a personal loan, but it is an unsecured loan with a higher rate of interest and thus EMI is also high. A good possible choice to a personal loan is the loan taken against assets possessed by you. These assets can be gold, shares, insurance policies or property which are unproductive. Loans on the assets are possible and one such loan is a loan against property.
A loan against property is a secured loan authorized keeping the property as a mortgage with the lender. In terms of property, it could be an owned land, a house, or any other commercial premises. The security in this type of loan is the property owned by the person applying for the loan. The financial worth of the property determines the quantum of potential loan that will be sanctioned. The property must be free from mortgage or any type of litigation. The property stays as collateral with the lender until the whole loan amount against the property is repaid.
The financial institute offers customized loan against property which fulfils the unique purpose of each borrower. The loan covers personal requirements such as weddings, medical emergencies, higher education home renovation, purchase of a new home, medical expenses foreign trip etc. Loans for business purposes such as buying machinery, raw product, equipment, funding of working capital, debt consolidation etc.
When deciding on the value of the property the financial institutes use the standard method sanctioning loans of about 65% of the value of the property under consideration. The repayment period given for LAP is 15 years subject to age norms. The EMI is slab is easy to pay. The rate of interest varies between 12% to 16%. The financial institutes consider the income details, savings, employment records, repayment track record for credit cards, previous loans etc and other conditions before disbursement. The property will be assessed on the current market value.
A piece of very vital information is that like education or home loan you cannot avail any tax benefits on a loan against property. The burrower will be needed to pay tax on the amount you use to repay your loan.
A loan on the property is among the best ways to raise money. In case the borrower is not able to pay off the loan in full within the stipulated time the lending agency can take possession of the mortgaged property and auction it off to get back the loan amount.
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