Loan against property (LAP) scheme will enable you to receive money from a bank by mortgaging property. The process simply states that your property will act as a security deposit for the money you wish to borrow. So, until and unless you do not repay the loan, the Power of Attorney for the property will be held in the custody of the bank. In case, if a person defaults to pay the loan taken, the bank has full authority to acquire the leased property through legal procedures.
It should be noted that secured loans are cheaper as compared to unsecured loans. LAP being a secured loan, the rate of interest is close to 11%. The minimum loan amount is variable. Most of the loan against securities financial institutions offer more than 2 lakhs. The amount can be received from the bank to which you mortgage your house or as an overdraft facility. Though one may find loan against securities a very tempting option to acquire a loan, one should be cautious.
It is an ideal scheme if you need to expand a business. It is highly advisable not to take housing loans in India to start up a new business. It is rather preferred that such loans be taken only when a business is doing well and need room for expansion. One also needs to check that they are capable of paying the loan back. If you do default on the payments, it directly hampers your credit score and you will be liable for a hefty penalty.
Loan against securities is a great way to fund student’s higher education. But when taking such loans, one must ensure that you have the means and the ways to pay back the loan. In order to do so, get into doing a bit of research to look for best rates of lower interest and cheaper processing charges. Presenting below are some of the features of loan against securities.
Loan against property enables borrowers to acquire loan sanctions by leasing out their property to a bank.
The ratio of loan offered in loan against properties is 60 to 70% of the actual property value.
If you take a loan against security for business endeavours, then tax deductions are applicable as they come under business income. Also, there is no tax deducted on the principal of LAP.
All the banks and NBFC offer a tenure of 15 years to repay any housing loans in India for a loan against property.
Acquiring LAP is easier as the procedures and policies to applying for a loan against security are easier.
Loan granted by LAP cannot be used for investing in stock markets, abstract business, gambling, and any illicit methods of investment.
One must keep in mind to have a great amount of clarity on whether there is a genuine need to apply for a loan against property. Do your research well, once you are absolutely sure about the same, you could start the application process. JM Financial is one such advisory firm that can assist you in acquiring the loans you need. They also have a varied service offering such as Investment Banking, Equity, Debt, Commodity Sales and Trading, Wealth Management, Portfolio Management Services, Asset Management, Alternative Asset Management, Financing and Lending, Housing Finance and Distressed Asset Management. Their large offerings have managed to form a huge customer base. Do visit their website to understand their services better.