10 Reasons Why You Need to Consider a Loan Against Property for Your Personal Needs

When it comes to loans in India, a loan against property or land mortgage loan is one of the most flexible loans. It provides many benefits, including flexibility in end-use, long repayment term, easy eligibility, minimal documentation, high loan amount, and other features. 

This article elaborates on the ten top reasons a loan against property is the best borrowing instrument for fulfilling your personal needs.

What is a Loan Against Property?

A loan against property, a.k.a. Land mortgage loan is a mortgage loan especially tied with a property. Any eligible Indian citizen can apply for a loan against property by pledging their residential or commercial property. 

Lenders approve the loan amount after evaluating the property status, location, condition, and the borrower’s credit score and income. 

10 Reasons to Apply For a Loan Against Property For Personal Needs

Here are the top 10 reasons why a land mortgage loan is the best instrument for fulfilling personal needs:

Flexible End-Use 

Like personal loans, there is no limitation on the end use of the funds received through a land mortgage loan. You can use the money to sponsor many things, such as weddings, travel, house purchase or construction, home renovation or improvement, education expenses, or medical bills. 

Alternatively, you may withdraw a bulk amount to meet more than one financial obligation. 

However, refrain from using the money on speculative activities like share or crypto trading or mutual fund investments.  

High Loan Amount 

The loan amount of a loan against property can be as high as 60% of your property’s market value. So, if your property’s market value is INR 1 crore, you can apply for a maximum loan amount of INR 60 lakh. 

However, the lender will send a valuer to your property to determine its actual worth based on its location, age, status, and condition. The exact loan amount depends on the final property value after valuation. 

Long Repayment Tenure

Unlike a personal loan, a land mortgage loan comes with a repayment term of twenty (20) years. So, you can modify the EMI according to your repayment capability. 

If you want to clear off the loan earlier, reduce the tenure, and vice versa. 

Minimal Documentation

To apply for a loan against property, you need to submit documents including income proof, KYC (Know Your Customer) documents, property papers, and a processing fee cheque. 

You may either upload the documents online or deposit them at a branch. 

Relaxed Eligibility 

Since a loan against property is a mortgage loan, the lender’s risk is subdued. This enables them to offer relaxed eligibility on such loans. Reputed lenders display the eligibility criteria on their websites.

You can check the lender’s website to find your eligibility and better negotiate mortgage loan interest rates. 

Attractive Interest Rates 

Land mortgage loan interest rates are generally much lower than personal loan rates. This is because, unlike personal loans, mortgage loans are secured. 

The interest rate of mortgage loans depends primarily on the borrower’s credit score. So, if your credit score is above 800, you may expect interest rates in the range of 7.75% and 8.25%. 

Conversely, if your credit score is less than 170, the interest rate may range between 10.15% and 10.65%.

Affordable EMI 

Because the mortgage loan interest rate is low and the repayment term is high, the EMI never burdens borrowers. 

You can choose the loan amount and term that suit your budget. 

Low Foreclosure Charges

The foreclosure charges on floating-rate land mortgage loans are much lower (sometimes zero) than on fixed-rate loans. Hence, if you want to become debt-free earlier, you may foreclose at will and become eligible to apply for new loans.

Continuous Ownership 

A land mortgage loan enables you to utilize the idle value of your asset while you continue living in the same property. Hence, you do not need to leave your property to avail of a loan against property.

Quick Approval

If your documents are in order and your eligibility is high, you can be assured of quick loan approval. Some lenders send a representative to collect the documents and verify the property within 48 hours of the loan application.

Once the verification is done, the loan amount is disbursed to the borrower’s bank account. 

Conclusion

A land mortgage loan is one of the best instruments for getting money whenever you want. Use an EMI calculator to compare the rates offered by several lenders before choosing the right one.