Types of Loans
Types of Loans- Loan Against Property
Unlike personal loans, these are secured loans where the loan amount can be used for any purpose, like a personal loan. Instead of keeping your properties idle, you can use them for meeting your financial requirement by taking a loan against that property. Commonly known as LAP, these are loans given keeping a property as collateral. The pledged property can be residential, commercial or industrial. The disbursed loan amount is usually a percentage of the property value and can be used for any purpose by the borrower. Loan against properties is a method to use the dormant potential of your immovable assets to meet your financial goals such as higher education of children or their marriage or attending to emergency financial requirements.
- LAP has slightly higher interest rates than home loans, but it is still low compared to other unsecured loans such as personal loans and credit cards which can help you meet similar financial goals.
- LAP can be prepaid by the borrower.
- LAP has a longer tenure.
- Since the interest rate is lower, the EMI of LAP also tends to be lower.
- LAP can only be given on a property that is free from any other kind of loan. For example, if a house has a home loan running on it, it cannot be used for LAP.
- For taking a LAP, the borrower has to be the undisputed owner of a property. In case the property is disputed, it cannot be considered for LAP.