Do you want to send your child aboard for education? Or need finance for your business? Or even finance your child’s education, then the first question that came into the mind of most of us is "Where to get money from?" There are various options that can help you in arranging money, and one of that way is applying for a loan. You can apply for loan against property or personal loan according to your choice.
So what does Loan Against Property (LAP) means?
LAP is a loan that grants money against your property. The loan amount offered is the certain percentage of the market value of the property, usually around 60-70 percent. This loan is secured in nature where the borrower has to keep the property as collateral with the lender. The property used to place as collateral should be self occupied residential property. This can be a house or a piece of land.
It is a multipurpose scheme that can be utilized for fulfilling various requirements like:
- Paying medical bills
- Going for a vacation
- Higher studies of your child
- Expanding your firm/ business
The eligibilty criteria for this loan vary from bank to bank. Usually the bank looks for the factors like income, value of property, repayment track of other loans etc.
How is LAP different from Personal Loan?
|Loan Against Property||Personal Loan|
|Secured loan||Unsecured loan|
|Property is used as collateral||Does not require any security|
|Cheaper than home loan||High interest rates as compared to other loans|
|Eligibilty is determined on the basis of value of property and income of borrower||Eligibilty is determined on basis of applicant's income|
|Maximum tenure of this loan is 15 years||Maximum tenure of this loan is 5 years|
Loan against property is the best way to raise money in times of need, but if the borrower is not capable to repay the loan amount, then the lender has the power to seize of the property. So, you should apply for a loan after analyzing your repaying capability.