Services
Loan Against Properties
Collateral
The property offered as collateral can be residential, commercial, or industrial real estate owned by the borrower. The lender assesses the value of the property and offers a loan amount based on a certain percentage of the property’s market value, often referred to as the loan-to-value (LTV) ratio.
Loan Amount
The loan amount approved by the lender depends on various factors, including the market value of the property, the borrower’s income and creditworthiness, and the lender’s policies. Generally, borrowers can access a larger loan amount due to the presence of collateral.
Interest Rate
Loan Against Property typically comes with lower interest rates compared to unsecured loans like personal loans because the lender has the security of the property. The interest rate may be fixed or variable, depending on the lender’s terms and market conditions.
Repayment Terms
The repayment terms for a Loan Against Property are usually structured as monthly installments over a predetermined period, commonly ranging from 5 to 15 years. Borrowers repay both the principal amount and the accrued interest over the loan tenure.
Usage
Borrowers can utilize the funds from a Loan Against Property for various purposes, including business expansion, debt consolidation, education expenses, medical emergencies, home renovation, or other personal financial needs.
Risk
While Loan Against Property offers advantages such as lower interest rates and higher loan amounts, borrowers should be aware of the risk of losing their property in case of default. If the borrower fails to repay the loan as per the agreed terms, the lender has the right to foreclose on the property and recover the outstanding amount by selling it.
Overall, Loan Against Property provides borrowers with access to substantial funds by leveraging the equity in their property, offering them flexibility and relatively lower interest rates compared to unsecured loans. However, borrowers should carefully assess their repayment capacity and financial goals before availing of this type of loan to mitigate the risk of default and potential loss of property.
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