Loan Against Property - Loan For Fulfilling Your Dream

Let your property take care of your needs. The rise in price for most of the thing increased the requisite of debt.Loan Against Property (LAP) refers to a multipurpose loan which can be obtained by mortgaging your existing residential or commercial property to meet the financial crunch. This loan puts funds at your disposal for crisis like education, marriage, dream vacation, home renovation, debt consolidation or even business expansion. Opting for LAP as a borrower, you will get financial assistance at very reasonable rate of interest and you can expend the amount for any reason.

This loan may be availed by Salaried, Self employed individuals, Partnership firms and Private Ltd companies. Banks have their own set methods to estimate the loan eligibility. However, it ranges from Rs.2 lacs to up to Rs.10 crores. The exact amount depends on your property valuation, income, savings, and existing obligations, credit history and of course repayment capacity. The age limit is fixed between 18 to 60 years. Normally the maximum loan amount can be upto 50% of property value for commercial setups and up to 60% for residential properties.

The loan requires simple documentation, principally an application form duly signed by the borrower, identity and residence proof, income documents; latest six months bank statement, documents to substantiate business existence as and when required and a processing fee cheque. The borrower needs to have a regular source of income to avail the loan. Though, the funds are offered against collateral security, the evaluation of your potential to pay back the loan amount in full is obligatory. These days most of the money lenders are offering these finances online. Online application is less time consuming and gives the aspirants the ease of making the application while sitting in office or home without any hassles.

Banks would offer you two types of interest rate namely, Fixed Rate of Interest and Floating Rate of Interest. Interest rates on this loan generally range from 12 per cent to 15.75 per cent. LAP is usually approved for a tenor of 15 yrs (180mths). The borrower can choose to make the repayments either through Electronic Clearing Service (ECS) or Post Dated Cheques (PDCs). A customer can always pre pay a part loan or repay the entire loan any time during the tenor based on the lenders norms for the same. For most of the lenders there are prepayment penalties to be paid if the loan is closed before the full tenure.

Various banks, private financial institutions are lending money these days. If you are opting for loan against property make certain that you do a lot of internet surfing to avail the best and risk-free deal. At the time of finalizing make certain to check all the penalties & fees. There are certain benefits of availing such loans. The borrower gets the opportunity of building up a good track record with a bank by making timely payments. The customer can enjoy several kinds of tax benefits, many banks or lending authorities provide various other kinds of advantages such as the insurance benefits, a zero balance savings account etc. One must ensure that he keeps up with the payment. You should always remember that you have pledged the most valuable asset as collateral against the loan. A prospective loan borrower must not rush into things while availing a loan.

Home Equity Loans and What You Need to Know

There is no debate that the availability of home equity loans is a highly valuable option for home owners in need of extra funds. The fact that a mortgage has been paid consistently for a number of years, and that the market value of the property has increased, means that there is equity available to cash in on.

Turning equity from your home into money that can alleviate financial pressures elsewhere is a logical option, especially when those pressures relate to family health, education and long term security, like paying hospital bills, paying college fees or making another nest egg investment.

The fact is, loans based on home equity are about as safe as anyone can get, with property always considered to be a reliable basis for providing a loan. After all, property appreciates in value, while so many other assets actually depreciates.

However, it is worth keeping in mind that home equity loans are not always the best choice, and if they are chosen, there are factors to be considered, not least the actual form in which the funds are made available.

Home Equity Forms

The first thing to consider is whether or not cashing in on the equity from your home is such a viable idea. There needs to be a clear value between the market value of a home and the balance left on the mortgage.

For example, a home worth USD200,000 with a mortgage balance of USD180,000 will only secure a home equity loan of USD20,000, whereas a balance of USD100,000 will secure a loan of USD100,000. Getting a loan too early will mean a true advantage is missed.

If the latter is the case, then clearly the home owner can gain considerably. However, there are two ways in which the additional fund can be accessed. It is commonly believed that loans based on home equity are available in one lump sum, like a normal loan. However, it is also possible to open a line of credit and to access smaller sums whenever they are needed. This makes it possible to use the equity loan to cover a range of smaller expenses over a prolonged period of time.

The Hidden Charges

When applying for home equity loans, there is a lengthy list of expenses associated with the process that many people are surprised to discover. Just as it is necessary to have property valued and attorneys involved when getting a mortgage, it is necessary to use professional services and face the fees that they charge.

Accessing equity from your home is no cheap process, with administration and lawyer fees to pay, pushing up the cost of getting the loan in the first place.

Get Professional Advice

With all of these factors to contend with, it is advisable to consult experts in home equity loans before signing any loan agreement. Getting loans based on home equity cannot be considered a straightforward transaction, and the value of the money involved means that it should be treated as the major investment that it is.

Without doubt, accessing the equity from your home can provide the financial relief that is truly needed, or can provide the means to invest in the future. Those factors alone can make the decision easy, but it is always worth knowing the facts.