Tag: India

A loan against property (LAP) is exactly what the name implies — a
loan given or disbursed against the mortgage of property. The loan is
given as a certain percentage of the property’s market value, usually
around 40 per cent to 60 per cent.

Loan against property belongs to the secured loan category where the
borrower gives a guarantee by using his property as security.LAP is
pretty similar to personal loan; the only difference being you put a
property owned by you as collateral against the loan. This property
might be confiscated in case you default on the loan. As there is
collateral against the loan, banks feel more secure in lending and hence
the borrower gets some bargaining power as compared to personal loans
which is unsecured.

What purposes can I take a loan against property for?

Loan against Property can be taken for following purposes:

When to take a loan against property?

It’s easier to get a loan against property, then a host of other loans.
Also, Interest rates are far more attractive than other forms of loans,
like personal loans. Also, the property continues to be in the name of
the owner and the asset can be put to a more productive use.

Loans against property is yet to catch up in India, but it’s something that can certainly be considered.

This gives following advantages:

Important Features of LAP

Few features related to LAP which makes this option attractive:

Why you should opt for LAP?

There are three basic reasons which make this option worth consideration-

1. Lower Interest Rate

As it’s a secured loan; you get a bargain of 4 to 5% on the interest
Rate you pay as compared to personal loan. The Interest rate ranges from
11 to 14%. This lower interest rate gives a clear edge to it over
personal loan where you pay interest in the range of 16 to 20%.

2. Longer Tenure of Repayment

This feature further reduces your EMI burden as you can get LAP up to
10 to15 years. When your cash flow is not steady this feature makes the
option even more attractive.

3. Ideal Use of Property

In
case you own a property and not using it, LAP gives an opportunity of
optimum utilization. You do not lose the ownership and get Funds at
cheaper rates at your disposal.

A loan against property is one
of the best ways to raise money. The only disadvantage of such a loan is
that if the borrower is not able to pay the loan fully, the bank or the
financial institution can take possession of the mortgaged property.
Base your decision on your repaying capabilities.

Education finances are boon for people who want to do higher
studies but could not afford it. Education Loan in India is provided by
banks and financial institutions and covers fee for all years, which is
normally disbursed to the college/institute directly by the bank. The
finance amount also covers most of the boarding and lodging expenses.
Here are answers to questions that boggle one’s mind before taking an
education loan:

What are the eligibility criteria?

The person taking the loan should have secured admission in the
institute. The institute or course of study must be recognized by
UGC/AICTE/AIBMS/ICMR, etc. The person needs to be an Indian citizen and
should be 17 years old or above.

What are the courses covered?

Education Loan in India is available for all approved courses leading
to Graduate/Post Graduate Degree and PG Diploma conducted by recognized
colleges/universities recognized by UGC/AICTE/AIBMS/ICMR, etc. Education
Loan is also available for part time courses and job oriented courses
subject to employability and earning potential. An education loan for
study abroad is also available for job oriented professional/technical
courses offered by reputed universities.

What are the expenses covered?

The amount is provided to meet all type of expenses which are necessary
for completion of course that includes purchase of books, equipments,
computer, travelling, study tours, boarding, lodging besides all types
of fees.

What are Documents required?

Documents like age proof, address proof, proof of clearing last
qualification, prospectus of course, letter of admission, income proof
of parents or guardians, etc are mandatory to be submitted even before
the bank considers the loan application. The bank will verify the
enrollment of the student from the concerned institute. One may also
require collateral security such as papers relating to property to be
mortgaged if the loan amount is above Rs. 4 lakh.

Some banks or financial institutions require all or any of the following documents as pre sanction documents:

What is moratorium period or holiday period?

It is the maximum time given to the student after finishing studies
that go without catering any payments for your loan. Mostly, it range
from 6 to 12 months.

What is the repayment tenure?

The repayment tenure depends on the amount of loan taken and type of
course. The minimum time given to repay the loan is 1 years and maximum
is 10 years.

Why guarantor is mandatory?

The guarantor could be an applicant’s parents or guardians who take the
responsibility for the repayment of loan in case of any mishap. The
bank will go through the guarantor’s credit history and also verify the
same before sanctioning the loan.

Is there any tax benefit?

The moment a person start repaying the education loan, he/she can
deduct the interest amount from the total income while calculating tax.
This means the effective interest rate on the loan works out to a lower
amount.