Collateral-based financing has been, for the longest time, the way forward for raising quick and convenient funds. The institutionalisation of this loan arrangement led to an introduction of several secured advances in the country, with the loan against property in India being one of them. These funding options have gained remarkable popularity in the Indian financial market, with most people availing the loans to fulfil their big-ticket monetary needs with ease. The easy availability of these loans along with fast approval and disbursal makes them suitable for quick funding as well.
Several other factors surround their ever-increasing popularity for Indians. Let’s delve in detail regarding the aspects that make a loan against property one of the most desirable funding options in the country.
5 Essential Aspects That Made Loans Against Property Popular in India
– The choice between property types for security creation
Under the property loan financing arrangement, a borrower needs to collateralise a fixed asset for mortgage creation. Based on this mortgage lending-borrowing framework, the lender provides the advance. Now, even though a fixed asset ownership is a must for borrowing, borrowers get the freedom to choose the type of property they want to collateralise to raise funds.
Mostly, a residential or a commercial property is used for the purpose of financing a loan against property in India. While no set rule prescribes property selection as per use. It is advisable to use a commercial property for business financing and a residential property for funding household expenses.
– High LTV
Loans against property in India often come with a high LTV offer. Wherein the total financing is determined as a percentage of the asset’s current market value. With reputed lending institutions in the market. The LTV for property loans can go up to 90% depending on a range of borrower-based factors. This enables maximised utilisation of your property’s underlying equity to raise funds.
However, as far as financial discipline goes, one must borrow loan for only as much as is needed and not secure the total of available funding just because its availability indicates so. One must also cautiously approach high-LTV loans as their interest rates are often high.
– Long and flexible repayment tenure
While loans against property in India are high-value advances, they vest the borrower with an equally remarkable responsibility for repayment. Given that such a high loan quantum cannot be repaid in a short span. Lenders often provide financing for tenures extending as long as up to 3 decades.
This allows the borrower a flexibility to repay the advance as it suits their affordability. When choosing the loan tenure, make use of an EMI calculator, which shall help strike the right cord between instant and long-term affordability.
– Balance transfer facility
Another striking feature accompanying property loans in India is the refinancing option that lenders provide. Under this arrangement, commonly known as property loan balance transfer. Allows the borrower to switch to a new lender mid-tenure. One of the prime advantages of this facility is that it allows you to secure better rates on the loan even after availing the advance. Which is not the case with most loan options, both secured and unsecured. The facility allows you to renegotiate other terms on your advance as well for favourable financing.
Given that loans against property in India come with zero restrictions to end-use. They are open to utilisation for all types of expenditures, both personal and professional. When finalising your loan option, make sure to compare among available offers from various lenders. To finally decide who to go with for the best terms, features and facilities on your advance. Make sure to keep all the loan against property documents required for hassle-free and streamlined processing of your advance.