Is loan against property better


#1

Is a loan against property better than home loan?


#2

Hi,

If you have a property, you can consider opting for a loan against your property to fund any of your financial needs like buying a home. The loan value is calculated as per the market value of the property and your repayment capacity. Loan against property has many advantages and disadvantages.

Advantages

Low interest rates : Since LAP is a secured loan, the interest rates are lower and range between 12-16% on an average compared to 16-22% for a Personal Loan or gold loan.

Can opt for either banks or NBFCs : Both banks and NBFCs offer LAP, so you can choose the most suitable lender as per your preference.

Disadvanatges

Cumbersome loan procedure : When opting for a loan against property or LAP, the bank or NBFC will take time in evaluating the market value of your property, reviewing the legal documents and doing other background checks like your repayment capacity. All this takes time and hence you cannot get an instant loan when faced with an emergency situation.

Strict terms and conditions leading to a financial stress : Once you take a LAP, you have to abide by the strict terms and conditions. Late payment of EMIs can result in penalty as per the terms and conditions of the bank concerned.

Tough non-repayment woes : In the worst case scenario, if you are unable to repay the loan, the bank has its right to take possession of your property and auction it to recover its dues which can be quite stressful for the borrower.

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Cheers,
BB Expert