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In Which Cases Does a Loan Against Property Make Sense for You?

By Finserv MARKETS - Jul 31,2019
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Uses of Loan Against Property

A loan against property (LAP) is a secured loan offered by lending institutions against owned properties. As a property owner, you can mortgage your assets to cover personal expenses such as business-related expenditures, education, and marriage. Banks sanction a loan amount of up to 60% of the current market value of the property. The valuation depends on various factors such as the location, quality of construction, and age of the asset. However, it is important to note the uses for a LAP and gain knowledge on accessing a suitable loan product. A few financial service providers, including corporate agents Finserv MARKETS, provide competitive offerings for LAPs with a quick application process, minimal documentation requirement, and complete transparency.

The LAP segment, as a whole, has seen immense growth with assets under management (AUM) increasing by 17% from 1.5 lakh crore in 2016 to INR 1.7 lakh crore in 2017. The growth between 2015 and 2016 figures stood at 29%. As of 2015, the LAP segment had a market of INR 2.3 trillion with a 30 to 35% compounded annual growth rate from the previous three to four years. Loans against residential properties also continue to form a dominant share of a lender’s portfolio at around 56%. This is closely followed by loans against commercial properties at 37%. The figures highlight the continued demand for LAP as a suitable loan product, but let us take a look at the various avenues that can be funded with the loan.

The loans can be utilized for the following purposes-

  • Mortgage buyout/Balance transfer of existing loan:

A balance transfer option on the existing LAP is one of the best ways to save money while paying back the loan amount. Simply put, it involves the transfer of the unpaid principal amount of an existing loan to another lender that offers competitive interest rates. This impacts your overall EMI outflow and builds savings in the long-term. In addition, loan providers on online portals such as Finserv MARKETS make the LAP balance transfer experience hassle-free and efficient.

  • Consolidation of debt:

In case you have multiple ongoing loans and are paying them in time, you might still accomplish a good credit score but can significantly impact your financial planning with multiple interest rates. The LAP can help you consolidate your debt and bring multiple loans under one umbrella. Selected financial service providers offer the consolidation of existing debts with convenient and affordable repayment processes. The loan amount can be up to INR 1 crore for salaried individuals and 3.5 crores for self-employed individuals.

  • Managing wedding expenses:

A survey conducted in June 2017 indicated that 35% of millennials wanted to spend between 10 and 25 lakhs for their wedding day with 4% interested in an expenditure of over 1 crore. Further, 42% intend to contribute along with support from their parents while 26% said they would pay from personal savings.4 In an online survey in 2017, it was revealed that 58% of respondents had considered a wedding loan to partially or fully finance their weddings. To manage these high expenses to achieve their life goals, millennials can access convenient LAPs from leading financial providers to handle wedding expenses.

  • New investments:

Investors can look at using their LAP to make new investments to access attractive returns and accumulate savings.

  • Financing education: 

Loan Against Property can provide access to funds for your child’s higher education. A few plans even include flight ticket costs, tuition fees, and living expenses as part of the loan You can view the eligibility of your property for LAP on online platforms with the eligibility calculator. With quick details on net income, EMI, and location, you can check if your property helps you qualify for the loan. Online portals ensure quick access to account information and enable efficient management. Leading financial service providers on Finserv MARKETS, for instance, offer hassle-free loan disbursal with minimal documentation, top-up options, flexible tenure between 2 and 20 years, and balance transfer facilities online. The features and benefits from online service providers increase the convenience of accessing and repaying a LAP.

Read more on what types of property you can obtain a loan on only at Finserv MARKETS

“Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make It Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere”!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522