A loan against property is a common way to avail long term loans for many. But is this a valid option for everyone? If you are a property owner, you have the option of simply applying for a loan against property to meet your financial needs. However, as with availing any type of loans, applying for a loan against property comes with its own share of considerations.

What is Loan Against Property?

Before we get into the considerations of applying for a loan against property, it might be worth reviewing how this form of loan operates. A loan against property is essentially an agreement whereby the lender offers a sum of money to the borrower in exchange for the latter placing his self-owned property as collateral. The loan is therefore secured. Keep in mind that the property placed on collateral can be commercial or residential and the borrower can continue to occupy it even after availing the loan.

What to Keep in Mind Before Applying for Loan Against Property

A loan against property is considered an ideal loan for property owners since these are relatively more economical than personal loans and offer large loan amounts that can fulfill a variety of financial needs. However, before you apply for a loan against property, here are 3 important points you should consider:

Know the Value of Your Property

With a loan against property, the asset that is considered the collateral is your property which means that the loan amount offered would be based directly on your property’s valuation. Therefore, it is essential that before you apply for a loan against property, you are well-versed with your property’s value, keeping in consideration factors such as its age, size, location and amenities.

Compare rates and features offered by lenders

While a number of lenders might offer loans against property, they will all offer different rates, features and benefits. As a potential borrower, it is therefore prudent to do a little research and compare the various loan against property interest rates and being offered by various lenders before zeroing in on the one that best fits your needs. It is also helpful to take into consideration the various other benefits offered by the lenders such as easy documentation, quick processing and balance transfer as these can help make that crucial decision easier.

Repayment tenure

Apart from focusing on the different loan against property interest rates offered by lenders, it is also important to focus on your overall repayment tenure. A reliable lender will be certain to offer you the option of flexible tenures of at least up to 15 years. While a longer tenure means smaller EMI amounts, a shorter tenure means large EMIs that pay off the loan much more quickly. Therefore, make your pick of repayment tenure wisely.

Conclusion:As a property owner, it is a great option to access the financial assistance you need by availing a loan against your commercial or residential property. Not only do you get to avail a form of secured loan that typically disburses large loan amounts, but you also get to continue occupying the property in question.

All that is required is a reliable lender that offers the benefits and features you need with their loan products. To that end, you can consider availing a loan against property with the reputed HDB Financial Services. The loan against property at HDB Financial Services offers loan amounts of up to Rs. 12 crore at flexible tenures of up to 18 months based on your eligibility.