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Sagun Finance Loan Against Property

  • Loan Against Property :
    • Loan Against Property (LAP) or mortgage loan is a type of secured loan offered by banks and Housing Finance Companies (HFCs) against commercial or residential property owned by the borrower. The amount, which is availed by keeping the property as collateral till the loan is fully repaid, can be used by the borrower for various purposes like expanding a business, funding children’s education, meeting medical expenses, and more. The maximum loan amount provided under LAP can go up to 70% of the property value. Along with being cost-effective, loans against property are reasonably convenient to avail and repay due to the relatively low mortgage interest rate.

  • Features and Benefits of Loan Against Property :
    • The availability of higher loan amount and the flexibility to use the amount for various purposes make LAP a better option compared to a personal loan. Mentioned below are some of the features and benefits of availing a Loan Against Property.

      • The loan is available against self-occupied residential property, such as house, apartment, flat, etc.
      • It is also provided against rented residential properties.
      • It is available by mortgaging commercial properties like an office building, malls, shopping complex, shops, etc.
      • It can be taken against a plot of land owned by the borrower.
      • Available for both salaried and self-employed individuals.
      • It comes with flexible tenure and lower interest rate compared to personal loans.
  • Loan against Preoperty Eligibility Criteria :
    • The eligibility criteria for availing LAP varies from provider to provider. However, to provide you with an overview of the minimum requirements, mentioned below are some general conditions.

      • Applicant must be an Indian national
      • He/She should be at least 21 years at the time of submission of the loan application
      • Applicant must have been employed by the current organisation or should have been involved in the current business for a specific number of years
      • Applicant must have a good credit score, demonstrating his/her history of successful repayments
  • Charges Applicble on Mortgage Loan :
    • While availing a mortgage loan, certain charges are levied by the banks or the HFCs to process the loan. This amount varies from bank to bank and should be considered while selecting the financial institution. Let us take a look at these charges.

      • Processing Charge :It is a necessary fee payable at the time of loan application. Even if the loan is rejected, the processing charge would be forfeited by the financial institution.
      • Foreclosure and Prepayment Charges:If the borrower wants to pay off the complete loan amount before the due date, it is called foreclosure. In case, the borrower decides to pay a part of the loan amount before time, it is called prepayment. For both prepayment and foreclosure, banks levy a charge on certain categories.
      • Other Charges:Some common charges include legal fee, documentation charges, stamp duty, technical evaluation fee, title search report fee, etc.
  • Loan Against Property Prepayment :
    • A distinctive feature of LAP is the flexibility to prepay the outstanding loan amount any time during the loan tenure. As per latest RBI guidelines, no prepayment charge is levied in case of individual borrowers, who have a floating rate of interest applicable on their loan against property. However, corporate entities are still charged a certain fee for prepayment, but it is minimal. Prepaying your loan amount helps to bring down the outstanding principal amount.

      Benefits of Prepayment of Loan Against Property

      Prepayment of the outstanding amount under Loan Against Property offers various benefits. Some of them are:

      • Reduced loan tenure:Prepayment of the loan helps in reducing the outstanding amount. This feature can be utilised in reducing the loan tenure so that you can get over the liability as soon as possible
      • Cost-saving on EMIs:Once you have prepaid the loan, the amount to be repaid decreases, thus, the monthly instalments of the loan also go down
      • Reduced interest cost :As part of loan prepayment, you pay the principal amount first, which ultimately reduces the interest amount. This helps to reduce the interest cost
      • Greater ease of loan repayment within stipulated tenure:Repaying your loan borrowed against the property would become easier