What is Loan Against Property?
If you own any property which has a clear and marketable title and you also have a regular cash flow generating business/profession then you can mortgage the property with the bank and avail EMI based loan.
Normally banks provide Loan Against Property for a tenure of 10 years which at times can also be extended upto 15 years. Due to this a longer term tenure can be availed which is generally not available in Personal or Business Loan.
Type of Property
- Residential (Self-occupied, Vacant or Leased)
- Commercial - Office, Shop (Self occupied, Vacant or Leased)
- Industrial - Factory, Warehouse, Godown (Self- occupied or Leased)
The property should be located within the geographical location approved by the respective bank / financial institution.
Amount of Loan
Generally banks provide 50 to 65% of the value of the property subject to the type of property and the existing cash flow of the business/profession.
End use of the Loan
The loan amount can be utilized for any purpose except for investing in capital markets or illegal businesses or speculative business. However, at the time of application a concrete end use of the loan has to be given to the bank for approval.
Why Loan Against Property is better compared to other loans like Personal Loans and Business Loans?
- Longer Tenure - Generally longer tenure is available for a Loan Against Property compared to other forms of loan
- Cheaper - The interest rate on Loan Against Property is significantly cheaper than Personal Loan or Business Loan