We all are bound down by various social obligations and personal responsibilities that we need to dispense in our lifetime. For the proper and timely execution of all these actions, we need liquid money at various junctures of life.
One of the safest and easiest methods of arranging money for various liabilities is by availing of a loan. Depending upon the amount required, you can either avail of a personal loan or take a loan against property.
What is a loan against property?
An amount of money, as a loan, extended to disbursed to a person against the mortgage of a property that they own is what is termed as a loan against property.
Evaluation of the loan amount:
Usually, the market value of the property to be mortgaged is assessed first. Around 40-60% of it is extended as a loan to the owner. Loan against property comes under the category of secured loans where the borrower uses his property as a guarantee or security for the amount of loan taken on it.
What are the purposes for which a loan against property can be taken?
Loan against property eligibility can be used under various circumstances and for meeting cash requirements under the following situations:
- Business expansion
- Marriage of your children
- For higher studies of your children
- For a dream vacation with your family
- Meeting medical emergencies
What kind of properties can be mortgaged for a loan?
A self-occupied or a rented residential property can be used for availing of a loan. This could either be a constructed house or a piece of land.
Loan against property eligibility
Even though there may be variations in this clause from bank to bank, there are certain common factors that all banks consider before sanctioning a loan against property.
- Details of income, savings and pending debt obligations
- The total estimated value of the property to be mortgaged
- Your track record of repayment for other loans, credit cards, etc.
Normal interest rate and repayment of loan against property
On average, the interest rate on loans against property ranges between 12% to 15.75%. The repayment tenure for the loan is up to 15 years.
Benefits of taking a loan against property
A loan against property enables the borrowers to meet their high-end expenses with convenience and ease. These benefits are:
- Lower EMI’s
- Fastest loan approval
- low rates of interest that make repayment affordable
- Part-prepayment and foreclosure facilities without extra charges or very low charges, depending upon the bank.
One of the best ways to raise money for meeting personal expenses is through loans against property. However, the only drawback of this mode of loan is that if, in any case, the borrower is unable to repay the loan fully, the bank or the financial institution has the right to take possession of the mortgaged property and recover the money by selling it off. Hence, you need to base your decision banking on your repayment capabilities.
To get first-hand information on loan against property eligibility, and other related details, you can even log on to www.pnbhousing.com, a one-stop online destination that can answer all your loan-related queries.
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