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Life is very uncertain with various ups and downs. You never know when you may need additional funds to deal with any of lifes exigencies. When such a situation occurs, a loan can become a saviour of sorts. There are different kinds of loans for different needs, they may be secured (against an asset or collateral) or unsecured.

For example, a loan against property which is also known as a mortgage loan, is a type of secured loan as there is a collateral (in the form of Real Estate) involved, basis which loan is sanctioned. If you require a higher loan amount then it makes sense to opt for a loan against property, as it is one of the quickest and most efficient ways to raise funds. Such loans require you to pledge a property (real estate asset) as collateral in order to get the required funds from an NBFC, Bank or Financial Institution. The Land, Building or any other real estate asset, that you give as collateral, acts as a security for the lender against the amunt being loaned.

Advantages of a Mortgage Loan or Loan Against Property (LAP):

  1. High Loan Amount: If you are seeking a higher loan amount, personal loans (unsecured loan) may not be able to fulfil your requirement. A loan against property, lets you borrow up to 75% of the property value.

  2. Lower Interest Rate: As the loan amount is higher, and it is backed by a real estate or property asset, the interest rates tend to be lower and highly affordable.

  3. Low EMI: EMI's of a mortgage loan or loan against property are spaced out in smaller amounts over a longer period of time owing to the nature and size of the loan. Hence, a loan against property makes optimum utilization of funds and reduces the monthly financial burden on the loan applicant.

  4. Longer Tenure: Such loans usually have a longer tenure of up to 15 years, and you also have the option of paking a part or complete pre-payment.

  5. Limited Usage Restriction: You can get a loan against property for a variety of purposes, these loans are usually avaiable for all business activities. 

  6. Unlock the hidden potential of Real Estate Assets: The loan applicant is the sole owner to the property even after the lender sanctions a loan against it. You can continue staying in or using your property even after mortgaging it. Thus, your asset doesn't stay idle and you can make optimum use of resources at hand to expand your business or undertake any other business related activity, such as:

    • Business Expansion

    • Plant/ Machinery Acquisition

    • Project Financing

    • Debt Consolidation

    • Lease Rental Discounting

    • Purchase of new commercial property

 

To apply for a loan against property, the loan applicant must be an Indian citizen, of at least 25 years of age at the time of loan approval. Eligibility of the borrower also comprises of factors like income, documents, CIBIL Score and credit history. Unlike unsecured loans, where your eligibility mainly depends upon your income (salary or business revenue) the eligibility for loan against property is also derived from property value. The documentation is fairly straightforward, requireing a few proofs pertaining to:

  1. KYC

  2. Income Proofs (ITR, Financial Statements, Projections, etc.)

  3. Company Constitution Proofs & Registration Certificates

  4. Property Papers

A loan against property (LAP) or mortgage loan is a multipurpose loan that can help you fulfil your dreams as well as retain ownership and usage of the property being pledged. To know more about Loans Against Property, visit Hero FinCorp - Loans Against Property

Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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