One may require financing to fulfil expenditure of any kind, which can range from personal requirements to business expenditures and more. For instance, it is common for one to avail external funding to fulfil the high-value financing needs of child’s higher education. Similarly, people have also been known to avail funding to meet the rising wedding expenses. Instances like medical emergencies have also driven people to avail funding of high quantum for easy and quick financing. Professional expenditures further stand a wide scope of arenas that need to be addressed with suitable financing.
While these are diverse expenditure needs one may encounter, it can be challenging to find a funding source that caters to several such financing needs with ease. Loan against properties has been among the commonest financing options one may resort to for fulfilling any one of more of the funding needs mentioned above. Several reasons command why a property loan comes off as the go-to financing option for many.
A Wide Range of Properties Eligible for Financing
Loan against properties are secured advances that need an individual to provide an asset as collateral for the purpose of financing. As they are mortgage advances, one needs to provide any fixed asset to avail funding in the form of a property loan. Various lenders accept a range of fixed assets, both personal and business-owned for the purpose of approving the advance to individuals.
Some of the common properties eligible for mortgaging under a loan against property include the following.
- Residential house property, both self-occupied and let out
- Shops and buildings
- Lands for construction
- Plant and machinery
- Agricultural lands
The list is long; however, the acceptability of these assets as collateral may differ from one lender to another. You may thus want to check out with your financial institution of your asset acceptability before applying.
Utilisation of Underlying Equity in an Existing Asset
Another top reason why people often go for loan against properties as their preferable mode of securing finance is the lending framework they are designed on. Unlike unsecured advances, financing through a loan against property relies on the underlying equity value of a given asset and leverages it for the purpose of funding.
Thus, if you have selected to avail a property loan against your self-occupied house property, you would be able to raise necessary funding as per the market value of the house without needing to risk its ownership while you continue to live there.
High Loan to Value Ratio
Another important aspect to understand about a loan against property is a high LTV or Loan to Value availability. LTV is a concept underlying the working mechanism of all secured advances. It refers to the total financing value provided by a lender as a percentage of the collateralised asset’s current market value. Capping total loan availability at the lender’s discretion.
While this percentage varies for different secured loan options. It is one of the highest in the case of a property loan. All necessary eligibility requirements, the LTV can go as high as up to 90% of the property’s total market value. Which makes it a preferable funding option among many.
Property loans are long-term advances that come with financing of high value, which makes them suitable for fulfilling funding needs running in even crores. With reputed lenders, candidates holding the right eligibility can raise funding that can go as high as Rs.50 Crore.
Such financing can be crucial if you are planning to purchase a new property or need investment in high quantum for your business.
Repayment Flexibility Over a Long Tenure
As the financing is available in high value, lenders also enable a tenure flexibility that should allow. The borrowers to make easy repayment of the advance. With select lenders, the repayment tenure can be significantly flexible, extending between 15 and 20 years with ease.
Zero Restriction to End-use
As mentioned above, loans against properties can be utilised to address a range of financing needs. Even, they are available to fund both personal and professional expenses with ease. It thus makes these loans as financing options that come with zero restrictions to end-use.
It is one of the most popular financing options among many people.
Affordable Rates of Interest
As secured advances, property loans are affordable for many too with their competitive rates of interest. These rates are often lower than rates applicable to many popular. Unsecured funding options like personal loans, which is another reason why they are popular among many.
Option for Balance Transfer
The option to transfer your outstanding loan balance to a new lender offering better rates. And terms makes it popular among people. It adds to the overall advantage of affordability that a property loan comes with.
Apart from these, factors like easy online loan application and processing along with repayments in ease EMI make loan against properties more accessible than ever. One would only need to meet a handful of eligibility criteria and provide necessary documents to apply for the advance.