With an annual increment rate of 22%, loans against property have become one of the popular credits alongside personal loans. Personal loans require a high credit score which may be relaxed to some extent in the case of property loan.
So, below mentioned are the reasons why it is a preferred choice for many individuals.
- High loan amount-
The credit amount completely depends on the property to be pledged as collateral. Financial institutions provide up to 75% of the mortgaged property value as the loan. So, for a high-value property, you can avail a loan against property till up to 75% of its market value.
- Affordable interest rate-
Secured advances offer high value loan amounts at lower interest rates in comparison to unsecured loans. Since secured loans are less risky for a lender, they offer the loans at attractive rates of interest. And thus, individuals in need of funds find this method of credit beneficial. But before availing loan must comparison between fixed vs floating interest rate consider checking the repo rate and MCLR before application.
- Possibility of long tenor-
Because of the large credit amount sanctioned as property loan, financial institutions offer around 18 to 20 years for repayment. Longer tenors reduce the EMI amount significantly.
- No end usage restriction-
Like personal loans, these loans too don’t have any end-use restriction. Borrowers can utilise the loan amounts as and how they want to.
Besides, several reputed financial institutions and non-banking financial companies (NBFCs) offer negligible or zero charges on loan against property. This means no processing fee, part-prepayment charges, and foreclosure charges are included.
Considering the higher loan amounts offered and lower interest rates, you can consider a loan against property instead of a personal loan to meet high-value financial requirements.