Quick Pros and Cons of the Loan Against Property Facility

A quite famous solution for the long tenor loan has always been the loan against property (LAP).

The loan against property or LAP can be defined as borrowing a huge sum of money by pledging your property with a bank or any other lender.

When you keep your property as collateral with a lender, you get to enjoy a lower loan against property interest rate.

Hence, anyone requiring a large amount of money to fund diverse needs can look up to the property loan facility at a lower rate of interest.

As a result, he/she can also opt for a longer tenor and pay smaller EMIs to manage monthly expenses without stress.   

The prospect of acquiring the bigger loan amount by pledging down your property may be a profitable idea. However, you may come across some pros and cons.

Yes, everything comes with advantages and disadvantages and the loan against property is no exception. To make you aware of all such pros and cons of the loan against property, we have created this quick post to uncover all details.

The Loan Against Property Pros and Cons

The Pros

  1. One of the biggest benefits of the loan against property facility is that you can get a higher loan amount to manage your multiple needs. If you are a salaried professional, you can get up to Rs.1 crore as per your loan against property eligibility. On the other hand, self-employed individuals can borrow even more up to Rs.3.5 crore. Hence, no matter what may be your personal and professional needs, you can use the LAP facility to fund your diverse needs.
  2. Another vital benefit of the LAP is the lower interest rate. Yes, since the loan that you wish is being offered against your property, you get a lower rate. Hence, having the lower loan against property interest rate can help you save more compared to personal loans.
  3. The facility of availing the longer tenor is another feature of the loan against property. With tenor ranging between 2-20 years, you can easily stretch the loan amount and repay in smaller EMIs. This way, you won’t need to stress about the loan repayment affecting your monthly expenses.
  4. You can monetize an idle property to fulfil your multiple needs is another facility of the LAP. The ‘to be mortgaged’ property can be self-owned, commercial or idle.
  5. You can withdraw an amount from your total sanctioned loan limit (overdraft), and pay just the interest as EMI on the amount. You don’t need to pay anything else. The remainder of the loan gets settled after the end of the tenor.

The Cons

  1. When you apply for the loan against property, the wait time for the money disbursement could be longer with the banks. It is because they need to evaluate the property. Also, checking another loan against property eligibility factors may take time. In such cases, you can apply with a non-banking finance company (NBFC). They can complete all the loan procedure within 72 hours.
  2. Taxes are generally not exempted from the loan against property facility. It can be a negative factor in gauging if you should opt for the LAP or not.
  3. The lenders can sell off your property and then claim its dues if it sees that you are unable to repay the loan within the stipulated time.

Some of the crucial advantages and disadvantages of the loan against property are enlisted now. You can discuss all these factors before applying for the loan against property to make it work in your favour.

Bajaj Finserv offers some affordable pre-approved deals on loan against property, housing finance, business loans, finance and a lot more financial products.

The motive of such offers is to help you go through the entire loan procedure fast and hassle-free.  You can check out your pre-approved loan offers now after sharing your basic details such as name, and mobile number.     

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