What is Loan Against Property?

If you need funds to cater to a personal or business emergency, a personal loan is an ideal option. However, personal loans have limitations, especially when your requirements are huge. Under such circumstances, a Loan Against Property is a better alternative. Both personal loan and Loan Against Property are similar in many ways, but they differ a lot, as well. The eligibility criteria for a personal loan are different from that of a Loan Against Property. They differ in many other ways, too.

Loan Against Property - General Eligibility Norms

• A Loan Against Property has a minimum and maximum age requirement. Usually, the minimum age requirement is around 21 years, with the maximum being 65 years. It depends on the lending institution.
• Generally, both self-employed individuals and salaried persons are eligible for a Loan Against Property. The standard requirement is that the applicant should have a regular source of income.
• Joint applications are permissible in a Loan Against Property. The lending institution can accept the income of the co-applicants for arriving at the eligibility.
• The applicant should have unencumbered property in their name
• The property can be residential, commercial, or industrial. Agricultural land is not acceptable as security for the loan.
• Many banks stipulate that the property should either be vacant or self-occupied. Some of the banks do not consider a property that is let out on rent or lease to third parties.
• Some lending institutions sanction loan against vacant residential plots
• The margin on Loan Against Property can be 10% to 50% of the market value of the property

These are the general eligibility norms. It can differ from one bank to the other.

Loan Against Property - Advantages

• It provides you with an opportunity to get a lump sum amount to cater to personal or business needs.
• The Loan Against Property is cheaper when compared to a personal loan or an advance against the credit card.
• It is useful when the requirements are high
• The eligibility criteria for applying to a Loan Against Property are comfortable
• One does not need an excellent credit rating to be eligible for a Loan Against Property
• The Loan Against Property has an extended repayment tenure. Therefore, it is a convenient liability in many ways.