Cash urgencies can catch you off guard, but don’t allow them to become a reason for financial stress. When faced with emergencies like paying for your child’s higher education or paying for material and labour for an urgent renovation at home, you will need access to hefty funds on an immediate basis. To protect your savings and investments, you can easily apply for a loan and finance these needs in a better manner. In this regard, even though a personal loan may seem as one of the most viable funding options, you may not always be able to raise ample funds with this unsecured loan. In such a case, a secured loan like a loan against property emerges as an option worth considering.
Read on to know how a loan against property emerges as a winner when compared to a personal loan.
You can Avail a High Loan Amount
A loan against property is a secured loan which not only means that you pay lower interest on the loan, but you also get access to a large corpus of funds. The higher the valuation of your property, the higher is the amount that you are eligible for. Lenders like Bajaj Finserv, for instance, give you a sanction of up to Rs.3.5 crore through a Loan Against Property. You cannot get access to such a high corpus of funds in case of a personal loan owing to its unsecured nature. Most lenders will give you sanction of Rs.25 lakh to Rs.30 lakh, which is significantly lower in comparison to a loan against property.
You can Borrow the Loan on lower Interest Rates
The low loan against property interest rate is one of the key reasons why this secured loan variant has an edge. Lenders usually decide the interest rate based on the property you pledge and there is no restriction on the type of property you can put up as collateral, be it residential or commercial property. However, bear in mind that properties that are new, from reputed builders and in sought-after localities are likely to fetch a higher loan amount and better interest rate too.
Additional Read: How Loan against Property Differs from Personal Loan
You can Repay the Loan on easy terms through a Longer Tenor
Being unsecured in nature, most personal loans have a shorter tenor of up to 5 years. On the other hand, you can enjoy easy repayment terms and a long tenor of up to 20 years when you take a loan against property. Besides, owing to the secured nature of the loan, most lenders will allow you to make part pre-payments towards the principal amount or foreclose the loan at minimal additional charge.
Now that you know how a loan against property is better than a personal loan you can check the loan against property eligibility criteria set forth by various lenders. Using an eligibility calculator, see if you are eligible for the loan that seems most advantageous to you. Then, fulfil the minimal loan against property documents requirement and get access to funds to meet your needs. Lenders will definitely evaluate your property before sanctioning funds so ensure that you have all the property papers in place.