Loan Against Property – Beware of These Benefits

The current credit market offers you plenty of credit options. Few of the credit options are availed to be used for a particular use, like education loans or home loans, while some others have no restriction on their endusage. Such credit options are even known as multipurpose loans. A personal loan is one of the examples of multipurpose loans that are commonly availed in the current scenario. However, do not avoid the fact that a personal loan is a costly credit option. One of the prudent alternatives to a personal loan is LAP (loan against property). A LAP is a multipurpose credit option, which is quickly processed and cheaper than a personal loan owing to its secured nature. As this loan option is secured in nature, a loan against property without income proof may be available too. This is because the lenders of loan against property tend to evaluate your property cost, your identification, etc., for approving the loan option and setting the loan against property interest rate. 

There are various benefits of a loan against property; read on to know all the important benefits:

Simple approval procedure

Among many benefits of a loan against property (LAP), the ease of approval is a prominent option. Opting for a LAP is a much simpler way than opting for a personal loan. The only factor that lenders consider is the property must be free from any type of mortgage litigation. 

End-use flexibility

Loan proceeds availed via loan against property is totally free from any restriction on its usage. You, as a borrower, can use the loan proceeds for any purpose. No matter whether it is a home renovation, the cost of pursuing higher studies, medical costs, home construction and others. A LAP or loan against property is the best match for all financial needs. 

Pocket friendly

A loan against property is an economical way of opting for the required financial support. Also, loan against-property rates are lower than that unsecured loan options. Loan against property interest rate starts from 8 per cent p.a. onwards while personal loan starts from 10.50 per cent p.a. 

Flexible loan repayment tenure

Loan against property repayment tenure is usually long. The repayment tenure for a loan against property may be stretched up to 15 years, while the highest repayment tenure for a personal loan is 5 years. A higher repayment tenure creates extremely less financial burden or pressure on you as a borrower of a loan against property. 

Also Check: Loan Against Property Interest Rate

Borrowing against distinct property kinds

To get a loan against property, you can use different types of property. You can mortgage a self-occupied home, commercial property or residential property or a piece of land for a loan against property. 


There may be no charges or penalties incurred on the pre-closure of LAP or loan against property. You can close your LAP account by paying in full the outstanding proceeds sooner than the determined loan tenure. However, the point to factor in here is if your loan is on the fixed rate of interest regime, you might require paying a nominal prepayment charge or penalty. Zero prepayment charge or penalty is incurred in the case of a floating interest rate on loan against property.

Top up option

Loan against property has a top-up facility. Like a personal loan or home loan, you can take up a top-up on the existing LAP (loan against property). A top-up on a loan against the property is offered by mortgaging the existing property with minimal documentation. 

Minimal debt burden

The debt burden of LAP is way lower than a personal loan. Note that there are 2 factors, i.e., low rate of interest and higher repayment tenure, which make the loan against property a credit option with less debt burden. When low-interest rates and longer tenure are merged, it results in a lower EMI amount, which lowers your debt burden on loan against property. 

Continuous ownership

Unlike various other secured credit options like a gold loan, property ownership will still be in your name. You, as a borrower, can continue to use the property despite keeping it as a mortgage for a loan against property. The only thing which the lender has is the custody of the sale deed of the property till the loan is repaid in full. 

Optimum use of the property

A loan against property endows you with the best property value. This unlocks the actual property potential. Alongside the general property use, it allows you to avail of a loan at a lower rate of interest. Property can become excellent collateral or security of secured loans. You can retain the property ownership while availing loan against property on the same property. 

Flexible loan proceeds

Loan proceeds that you get through the loan against the property option depend on the property price in the ongoing market. You can get loan proceeds of as high as 70 per cent of the property value. Loan proceeds can go as high as Rs 5 crore. 

Loan against property is a way better option for getting a bigger proceed easily in a hassle-free way. The only thing that you as a borrower must consider is that the property is mortgaged for a loan, and any missed or non-repayment of the loan might make you lose out on your property ownership. 

Ending note

Are you an individual who is conducting online research for loan options for getting a huge sum of credit, which is even cost-effective with a simple application procedure and minimal documentation? Your reasons for taking up a huge ticket-size loan may be to address the capital requirements of your personal obligations like marriage in the family, child education, business expansion, etc. At times, the requirement for instant credit even arises for an unexpected medical emergency that needs an instant and huge sum of funds for hospitalization and surgery. Here’s where you may consider opting for a loan against property. With a loan against property option, you can avail funds by keeping your residential flat, plot, office, or shop as a mortgage. Note that the offered loan proceeds may vary from one lender to another.

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