A loan against property, or mortgage loan, is one of the most popular types of loans offered by Non-Banking Financial Service institutions. This article tells you the reasons that make a loan against property one of the most popular loans and the top-5 situations when you can apply for a mortgage loan.
What is Loan Against Property?
A loan against property is a loan you can apply for by keeping your commercial or residential property as a collateral guarantee. In such loans, the legal ownership of the property remains with the borrower. But, as the property remains pledged with the lender, the lender may liquidate the asset if the borrower is unable to repay the principal, along with interest, on time.
A mortgage loan is a widely popular loan because of the following reasons:
- Fast loan processing and approval
- Higher loan amount
- Easy documentation
- Longer repayment tenor
- Wide availability
- Can be used for any purpose
Top 5 Reasons to Apply For a Loan Against Property
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Medical Emergencies
Medical emergencies are quick to come and take longer to go. According to a survey conducted by EY Insurance, India, with just 20%, has one of the lowest health insurance penetration around the world.
If you belong to the rest 80% with no health insurance coverage, a mortgage loan can be the best medium to take care of medical emergencies. Since the cost of hospitalization can extend beyond your budget, taking a mortgage loan is the best way to handle the crisis.
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Monetising the Value of the Property
A property is an immovable asset. By keeping it idle, you do not earn anything.
A loan against property allows you to monetise your idle asset at attractive interest rates. While you continue to retain the ownership of your property, you may use the money that you get by mortgaging your property for multiple purposes like investing in precious metals an other investment opportunities.
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Sponsor the Education of Your Children
With every passing day, the cost of education is increasing. You may fund the higher education of your children in either of the following three ways:
- Pay the entire amount from your pocket.
- Apply for a high-interest education loan.
iii. Apply for a low-interest loan against property.
Out of the three ways listed above, a loan against property is the easiest and the most cost-effective way to get money. You may use the loan amount for sponsoring your children’s education in India or abroad.
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Spend at a Big Fat Indian Wedding
Indian weddings are probably the most extravagant weddings in the world, and most families want the day to be perfect.
A mortgage loan is the best way to arrange for funds without borrowing it from your friends or relatives. Quick approval of the loan, a super-easy documentation process, and long EMI repayment tenure makes it possible for you to spend the money on decoration, jewellery, food and beverages, and decoration, without worry.
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Set-up a New Business or Upgrade Your Existing Business
A business requires funds to establish or expand. Almost all lenders shy away from giving loans to start-ups. A loan against property is an exception.
Since a mortgage loan is secured, lenders do not spend much thought on sanctioning it. On approval of the loan, you may spend it on acquiring a commercial property on lease, buying new machinery, repairing machinery, upgrading technology, hiring employees, paying off debt, and launching a business, among others.
Conclusion
The best benefit of a loan against property is that you may use it for any purpose you like. While all other loans like home, business, or vehicle predefine the areas where you can spend the amount, a mortgage loan does not specify what purpose you want to use your loan on.
Selecting a lender is the first step towards applying for a loan with the lower loan against property interest rates. A reputed lender offers you several benefits in addition to the loan. It includes online account management, transparent documentation and approval process, quick customer service, and personalized products.
Choose a lender who respects your dreams and values, and you will forever cherish the decision to apply for a loan against property as the best decision of your life.
