5 essential things you need to know before taking a Loan Against Property

Loan against property is an age-old way for lending and borrowing money. It has been done for centuries. Our ancestors mortgaged their homes and land to borrow money for farming, weddings and to educate their children. With time the system of taking loan against property too has become more sophisticated. You can now approach a bank and get a loan sanctioned by keeping your property as collateral.

A mortgage loan can get you a longer tenure and a higher sum. The amount you can get through mortgage loans depends on the size and valuation of the property you mortgage. The bigger the property, the higher amount of loan you can get.

You could use this loan amount at your own discretion. You can use to fund the education of your children, you can use it to fund their weddings, and you can use it to invest in other property, to invest in your business. You can even use to fund a medical procedure too.

Loan against property is the best way to get a loan. The loan against property eligibility is also minimal. You only need to have a good credit score and a property to mortgage. If you need to take a loan and are considering this kind of loan, then here are a few things you should know.

1.  Loan Against Property can get you a higher loan amount for your business or personal needs with the benefit of lower EMI. With easy documentation, speedy approvals and flexible repayment options, getting a loan is easier than any other time of loan.

2.  Loans can be applied for by individuals, either solely or jointly. Owners of the current property, in respect of which the loan is being sought, will have to be co-applicants. However, the co-applicants need not be co-owners. 

3.  To check your loan against property eligibility the lender will check the market value of your property. Banks and NBFCs give only a percentage of the market value as loan.

4.  Since a mortgage loan is a secured loan it is cheaper than personal loan. Mortgage Loan Interest Rates are way lesser than those of personal loans. Today interest rates for personal loans can range from 12.5% to 21% whereas those for mortgage loans are between 12% to 15%.

5.  The processing charge for this type of loan is 0.50% to 3% of the loan amount plus service tax. Service tax is currently 14% of the amount. The processing fee is usually deducted from the loan amount sanctioned to you.