It is a market full of endless
possibilities where anything can happen at any time. When it comes to mortgage
loans, one of the most significant finance options is Loan against
Property. However, since these loans do not require collateral against
them and have minimal eligibility criteria, the amount that can be availed as a
personal loan is less as compared to what can be assisted from secured loans.
In case you want considerably high funds, then taking a loan against property
is a better alternative. But, most people cease availing of such loans because
of some myths associated with it.
However, there is no reason to worry. To reassure you
further on this, here are 6 common myths on loan against property
●
You can only take loans against residential property
Perhaps the most common myth
among most borrowers is that you can take a loan against property only on
residential properties. However, that is not the case. You can get a loan
against property for both, residential as well as commercial properties. In
turn, you can use the loan against property to acquire commercial or
residential property or for lease rent discounting.
●
You require to have a high income to avail of a loan against
property
Contrary to popular belief, you
need not fall under the ‘high-income section’ to avail of a loan against
property. Most loan providers have set income eligibility for salaried as well
as self-employed individuals to avail of this type of loan. However, as long as
you can assure them of your loan repayment capability, it would not signify
whether you earn a high income or not.
●
You have to pay high-interest rates
Because of the escalating
property prices these days and the consequently high amount availed as a loan,
most people assume that the interest rates on a loan against property would
also be high. However, one needs to know that loans against property interest
rates depend on several factors. These cover the amount that needs to be
borrowed, loan tenure, type of property, valuation of your property, etc. As a
result, the interest given by different loan providers differs. However, most
loan providers allow a range of options to negotiate the interest rates on
loans against property depending on how much your credit score and the
estimated rate for the property.
●
You can’t use the property used
for a mortgage
Most borrowers worry that once
they mortgage their property for a loan, they cannot utilize the property
anymore. However, this is not valid at all. Yet after taking a loan against a
particular property, the borrower can enjoy the complete right to use it.
Usually, the property that most borrowers pledge for a loan is their residence
or commercial shops that they use for doing their daily business. During the
period of taking a loan against such properties, they worry about losing their
residence or shop. However, there is no need to bother. As long as the borrower
does not default on his or her loan payment EMIs, he/she can enjoy living in
the house or use the shop that is mortgaged with the loan provider.
●
The approval process is stringent
While availing of a personal
loan is very simple, these days, availing a loan against property is likewise
not much of a hassle. As long as the borrower matches the loan against property
eligibility criteria laid down by the particular loan provider, he/she can
easily avail of a loan.
●
Borrow a loan amounting to the full value of the property
Normally, when you appeal for a
loan against property, your approval is admitted due to several factors. One
point to note is the current market value of the property. Once the bank or
NBFC determines this, it comes at a sanction based on the loan-to-value ratio.
The rate discriminates from lender to lender; you can avail anywhere between
75%-90% of the property’s value as a sanction.
At a Glance
The loan against property is a
secured loan that offers high funds and low-interest rates as it requires
collateral against the loan. However, many people avoid availing themselves of
these loans due to various myths associated with them. The article suggests
that these myths are baseless and should not deter individuals from considering
loans against property as a viable option for fulfilling their financial needs.
However, If you want to be conscious of the same in a detailed way, India’s
leading financial advisor, Terkar Capital can help you. It does not just offer you an opportunity to
compare loans from private/public sector banks but also supports you in getting
the loan in a hassle-free manner.
