All you should Know about Loans against Property

1. All you should Know about Loan against Property Loan against Property Loan against property can be availed against a self-occupied residence or a commercial house. The foremost prerequisite on the bank's part is that there should not be any other encumbrance. Loan against Property is the most secure of loans therefore the lending rate is normally low compared to other unsecured loans. However, because of the configuration of lending by banks, they have a propensity to be somewhat higher than housing loans. The eligibility criteria for getting Loan against Property is also laissez-faire, as the property is available as collateral. The repayment term can also be long from 5 to 15 years. When to look at Loan against Property? For anyone who has a house or commercial property and is looking for a loan, Loan against Property should be the first option. The only loan with better features could be the gold loan. But there could be a lot of sentiments attached to pledging gold, so it generally gets done as the last alternative. That leaves the Loan against Property as the better choice. Though a housing loan and the Loan against Property are secured against the property, Loan against Property is on the existing assets and the assessment of the property is released for productive activity. For a businessman looking to inflate business, Loan against Property comes in versatile as they do not have to gaze for expensive sources and the processing is also much quicker. A few banks also give overdraft facility against the property; this will help the business as interest will need to be paid only for the amount used. Funding children's education can also be done using Loan against Property; also their marriages. But as a general rule, one has to be a cautious when taking loans for expenses. Advantages of Loan against Property Value of the asset owned is free for productive use. The interest rate is lower than other options like a personal loan or a credit card borrowing where the funds can be used for a wide variety of purpose without informing the lender. Processing is quicker than a housing loan as the assets is already in our ownership.

2. Partial pre-closure is authorized without any penalties. This is an advantage as the overall interest burden or the tenure of the loan can be abridged by paying small additional amount. If the assessment of the property has risen over a period of time, a re-financing option can be used to augment the loan amount. This aspect again is very constructive for businessmen, who are on an expansion spree. They can use the same property to constantly build the business. The property continues to be in the possession of the borrower. Some disadvantages of Loan against Property Banks usually do not give loans beyond 60 per cent of the assessment of a house property and 50 percent of a commercial property. New businesses generally cannot have access to Loans against Property. They should have been in continuation for at least 3 years. Salaried persons can get it if they are in employment for over 1 year itself. There will be some processing charges usually in the range of 0.5 percent to 1 percent. Source: http://www.idbi.com/loan-against-property.asp