The high-interest rates and shorter tenures of other categories of loans is the reason why people are shifting their focus on Loans Against Property.
This is a loan regime that helps people get over the cash crunch with peace of mind. How it works is our focus of discussion here
This loan is not for everybody out there. There is an eligibility status and if you are not up to 25 years f age, you will not be entitled to this loan offer. Further, you are expected to be either a self-employed person or a business entity before you can be given any consideration.
If you are a business entity, then the business should not be less than three years old. The property in question should belong to someone/group that fulfills the age eligibility for LAP. The combination of all the factors mentioned here should be in place before the application for the loan is considered.
The Documents Required
Now that we have settled the issue on eligibility status, it is pertinent to look in the direction of the documents that will be required before this loan is granted. A survey of the majority of the lending banks shows that the requirements are almost the same with little differences here and there.
Also, the documents do change with time and so you have to keep tabs if you want to avoid the minor issues relating to documents. You are required to present KYC, proof of income which includes income tax returns, financial projections, financial statements, and other related documents.
Business entities will be required to produce their company constitution and proof of company registration. Every document relating to the property being mortgaged will be required. The above covers the area of documentation.
What Types Of Property Are Eligible For LAP?
Let us take a look at properties that make the cut for LAP. All the three most common properties in real estate are all eligible for this loan. Industrial properties are not common, but if the owners want to expand their business line of operation, they can put in for this loan. Commercial properties are also mortgaged to avail loans. Most common here are residential properties which are often mortgaged to raise needed cash. Independent houses or buildings also fall into the categories that are eligible for a mortgage through this scenario is not very common. If you have properties that are occupied by tenants, in so much as you can show proof of ownership, it will qualify for LAP.
What Are The Advantages Of LAP?
Let us go into the glaring advantage of LAP over other sources of loans. The amount that you are going to get through this approach is on the high side. If you target the time that the real estate sector on the high, you will get a huge amount because what you get is a reflection of the property that you put up for sale.
The interest rates are pretty low. You are going to get something in the range of 9-12% interest as against personal loans that charge between 16-20%. Another strong factor going for LAP is the fact that it covers all the properties that you can think of in real estate.
Even an undeveloped piece of landed property can be used to get this loan. When it comes to payment options, it has multiple approaches that you can easily fall to when repaying the loan. The final icing on the cake is the long payment period for this loan. Most of the banks allow a minimum of 15 years to repay the loan; some go as far as granting a 25 years period to repay the loan.
How Can You Best Utilize LAP?
One of the best ways to utilize LAP is when you take it for business purposes because of the flexibility that comes with the loan. When you mortgage your factory or industrial land; you can use the loan to develop other areas of business. LAP can be used to offset multiple unsecured debts with a single debt portfolio and at a lower interest rate.
The numbers are easily simplified and the costs brought down from the rooftop. It is an effective way to do away with LSR which is not reliable. The amount you get with LAP is higher; you will not need to worry about regular payments by tenants; with LAP, the EMI is flexible and the interest rates are lower with LAP.
LAP is a way to achieve the goal of getting the needed cash without much stress. Simply go through the steps that we have mentioned above and ensure that you have everything tidied up in terms of all the requirements. The loan will pass through all the stages without hitch and the cash will roll into your account.