When it comes to availing a loan, a good option that many would consider is a secured loan against property. This loan is called ‘secured’ mainly because the borrower has pledged an asset (in this case, property) as a collateral for the loan. So, it is a secured debt owed to the creditor who will pass the loan.
Advantages of Secured Loan Against Property:
- Multi-purpose use: A secured loan against property can be used for a lot of things like child’s wedding or education, business reasons, medical reasons, renovating a house etc.
- Low interest, high tenure: The interest rates on a loan against property are generally low and falls between 8% to 12% bracket. This is much lower than the personal loans. Tenure is also more and can extend upto 15 years.
- Easy to avail: Most banks consider these loans secure and are more than willing to sanction them.
- Low EMI’s: A secured loan against property can be availed by a lot of individuals from salaried to business to professionals. You just need to have a commercial or residential property available in your name. Most lenders will only attach a small amount of processing fees for these kinds of loans.
- Refinancing: This is a very good benefit of these kind of loans. It basically means that if the value of the property goes up in a certain period of time, you can increase the loan amount as well. This is a very good option for businessmen who are looking to expand their business.
- Ownership: Lastly, ownership stays with the borrower and does not pass away to lender unless there is a default in the loan amount.
Disadvantages of Secured Loan Against Property:
- Amount of Loan: Only 60% to 70% of the market value of the property is sanctioned as the loan amount.
- Reluctance to Sell: Most individuals consider property as a prized possession and are not willing to sell it.
- Accessibility: Only businesses that have been in existence for 3 years can access these kinds of loans. For salaried individuals, they have to employed for more than 1 year.
- Not for everyone: It’s only for those who are aware of the future finances and can manage their finances properly.
Clearly, the benefits of your loans are based upon every unique customer. Depending on your financial needs, our experts at Finwizz Financial Services Pvt. Ltd. will help you with the best loan solutions in the market.