Loan Against Property Advantages


Loan against property or LAP (as financial abbreviation) is one of the popular and convenient options available in the market. It is a loan which you can avail when you keep a property either commercial or residential as a mortgage with the bank. Banks lend around 50% to 70% of the value of the property as the loan. The exact amount depends on a number of factors like personal and financial profile of the applicant, tenure, credit score etc. In case, there is a default in the loan repayment, the lender has the right to auction the property and receive the money.

Loan against property can be used for various uses like business uses, personal reasons, funding your child’s education, medical emergency or for marriage purposes.

5 Advantages of Loan against Property.

  1. Lower interest rate: The interest rate is generally lower as compared to personal loan. This is mainly because the property is used as a collateral. The rate is anywhere between 8% to 12% depending on the financial profile of the applicat, credit score etc. This is in contrast with the personal loan as it’s interest rate is quite high.
  2. Low or no prepayment charges: Most lenders do not charge any prepayments when the loan is taken by keeping a property as a collateral.
  3. Easy to get sanctioned: These are secured loans and banks are more willing to sanction LAP than other kinds of loans.
  4. Long tenure: Another benefit of availing loan against property is that the tenure can go for as long as 15 years as opposed to person loan, which offers tenure of 7 years.
  5. Less EMI: Since the tenure is generally long, EMI’s can be lower. This is due to the inverse relationship between tenure and EMI. However, long tenures also mean high interest burden. Therefore, it is generally recommended that loan should be paid up within the shortest tenure.

Apart from all of this loan against property advantages for the borrower, it is a secured loan for the lender too. So, it is a nice option for them as well. Before you put the property as a collateral, it is important that it’s free from any kind of mortgage of litigation.

Considering loan against property advantages, it is definitely a lucrative option if you are looking for a loan. Contact Finwizz Financial Services Pvt. Ltd., we have personalised solutions for every individual needs for loan. We would make you loan against property process easier and better.

AUTHOR: Sini Mathew
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