There are many misconceptions or myths surrounding Loans Against Property (LAP) that need to be dispelled. Read the blog to learn more about how to apply for home loan online, Loan Against Property, and the myths surrounding it.
In simple terms, a loan against property (LAP) or a mortgage loan is a secured loan that you can use as collateral for your home or commercial property. Compared to other types of loans such as personal loans, gold loans, or business loans, LAP is considered the best choice to meet all your financial needs due to its low-interest rate and flexible end-use.
Pay high-interest rates on a home loan - Another common myth about home loans.
- A LAP is a secured loan and therefore the interest rate depends on a number of factors such as
- B. Your creditworthiness, your monthly income, and your ability to repay.
A score of 750 or more can help you get a loan faster and on better terms.
The mortgaged property is unusable - Most borrowers worry that the next time they think about encumbering their property, they won't be able to use their property. When a house is mortgaged, they worry that they may have to leave their house, but that is not true, you can live in the house even after the mortgage is completed. Even if the shop/office is mortgaged, you can continue your business in peace.
Lenders Charge High Interest - Have you ever asked representatives of financial institutions why lenders charge some people higher interest rates and why not all borrowers get the same interest rate? The answer is the level of risk involved in lending to different types of borrowers. With a mortgage loan, you put your high-value property at risk, which in turn reduces the risk associated with the loan. Therefore, the PAP interest rate is much lower than other financial products. So, anyone who spreads the myth that home loans are only available at high-interest rates needs to be educated first.
You must be in a high-income group to get the Loan against property - This is another common myth about home equity loans. Even with a moderate income, you can qualify for it. Home equity loans can be taken out by employees and self-employed. In addition to good credit history, it's easier to get a PAP if you have low debt and the value of your property is high. If you are a long-time customer, your credit score will also affect your loan payments.
The approval process is strict - Although taking advantage of personal loans is very easy nowadays, taking advantage of LAP is also not a big problem. As long as the borrower fulfils the loan according to the property eligibility criteria set by the particular lender, they can easily avail the loan.
LAP property has a shorter tenor - Since the loan against property contains a large loan amount of Rs. 50 lakhs to Rs.1 crore, the term is extended to 20 years so you can pay EMI easily.