What is Loan Against Property?
‘Loan Against Property’, also known as LAPs is one of the variants of personal loan. LAP is a secured loan which comes handy in times of immediate financial needs. As the name suggests, the borrower can apply for loan from banks or NBFCs by giving their property as collateral. The type of property which will be kept as collateral can be residential or commercial, which is in current use. A borrower can keep one or more properties as collateral which belongs to him or her. Many people confuse LAP with personal loan and also shy away from this loan as there is a cloud of myths around it. But we are here to help you bursts these myths and know all the facts…
MYTH 1: You need a perfect credit score to avail LAP
To get LAP having a strong credit score is one of the major requirements. The approval of your loan does not depend ‘only’ on credit score. You may get leaser amount or higher interest rate if you have a little bit lower credit score. But that doesn’t mean you won’t get the loan.
MYTH 2: You get 100% loan in LAP
Banks and NBFCs decide the loan amount as per the current value of the property. And out of that value, banks and NBFCs give only 40% to 60% of amount against your mortgaged property. No financial institution gives 100% financing in LAP.
MYTH 3: Prepayment in LAP is not possible
Prepayment of loan means paying off the loan faster than given deadline at the time of loan approval. When you decide to pre pay your loan, banks charge you with minimum fees for pre payment. But that doesn’t mean that it’s impossible to prepay your LAP.
MYTH 4: Banks do not negotiate their fees
Banks charge a minimal amount as processing or administrative fees. This fee includes all legal and technical costs. If you think that you can’t bargain this cost because it’s a bank, then you are sadly mistaken! You can use your bargain skills and guess what, banks do budge. They negotiate these fees and you end up paying lower amount than earlier asked for.
MYTH 5: You can’t use your mortgaged property while it’s under debt
If you mortgage your house, you are surely not expected to live on streets. Banks and NBFCs understand this and they do not make you leave your property until it’s under debt. So whether it’s a commercial or residential property, you can use it as it suits you even when it’s under debt.
Now that you know all the facts about LAP, check your eligibility for the same by clicking here!