LAP – Loan Against Property, loans are a convenient means to access funds in the banking sector at lower interest rates than personal loans and any other forms of unsecured loans.When someone takes a loan, something has to be kept as a security in case he/she is not able to pay off the loan in the allotted period of time.
• Due a property being security the interest rates are low Because of the same reason as above Loan against property is a secured loan.
• The allotted time within the loan has to be paid is longer than any other loan. It can also be extended up to 15 Years
• The EMI (Equated Monthly Installment) for Loan against Property is lower than other types of loans, the reason being same as above point.
• The individual applying for the loan will not be able to request any amount. It is the property that will determine the extent of the loan: it has to be in the condition that it is required to be in as per the prevalent rules and standards of the country.
• Loan Against property has stricter income norms, which also constitute the eligibility norms in case of LAP, than Home Loans.
• The money Lenders carry out valuation of the property independently. They tend to value it at a lower rate than the actual market value.
• Since the use of the Loan against property is unknown, the lender is at a higher risk of getting a return and tends to charge more than other loans like education loan, home lone etc., where the purpose of the loan is fixed.
Just as everything in this world has its advantages and disadvantages, Loan Against Property has its pros and cons too. It has low interest rate simultaneously there is a risk of property being evaluated lower than the actual market price. Generally LAP is resorted to when the loan amount needed is more than what can be possibly generated by unsecured loans – since the value of a property appreciates continuously – and the repayment term required is longer than that for any other loans by 5 years.