The term Loan Against Property (LAP) is pretty self-explanatory. You can avail a loan by keeping your property as a mortgage with the loan provider. LAP is a secured loan, which means that in the event that you fail to repay the loan, the lender will have the right over your property to recover the money.
Such a loan is given as a certain percentage of the market value of the property. During times of financial need, LAP is a great way to secure a loan at low-interest rates. As long as the title of the property is clear, free of any litigation, and has no existing mortgage or loan, the process of availing such a loan is straightforward.
The eligibility filters are very generous: any salaried person (should be a salaried employee in an MNC, Private company or the public sector) between the ages of 33 to 60 years can apply for a LAP. You should be resident in India, and the property should be in the name of the applicant or co-applicants of the loan. Since the entire loan is reliant on the property, it is imperative that you have an insurance policy for it. The lender asks for you to insure your property to deal with the aftermath of eventualities like fire outbreaks and other calamities during the tenure of your loan, and furnish proof of such insurance as and when required.
How does a Loan Against Property become Flexi?
Before we delve into the Flexi Dropline feature, let us acquaint you with some important terms in a LAP.
Amortization is, in general, financial terms, the business practice of paying off a debt over time through regular payments. Following that, an amortization schedule is a table that reflects the reduction of loan amount by those monthly/regular payments. The amortization schedule gives the break-up of every EMI towards repayment of interest and the outstanding principal of the total loan.
What is Dropline
Dropline is an amortization construct – the amortization schedule reduces the loan amount with each repayment and ultimately the loan amount is brought down to zero by the end of the loan tenure.
Flexi Loan, provided by Finserv MARKETS to premium customers combines the features of a term loan and a Written-Down Value based credit line. This essentially means that you can prepay and borrow back on your loan within the drop line facility online. Availing the Flexi facility means you benefit by saving interest cost by pre-paying with surplus funds.
This happens because you save the interest cost by pre-paying with surplus funds and paying interest only on the remaining principal amount, without any interest being levied on the prepaid amount.
Thus, flexi loans offer the flexibility to pre-pay and to borrow back the prepaid amount within the drop line facility within the loan tenure. This helps save interest costs since the interest is payable only on the utilizes loan amount and involves minimal documentation.
Important amounts related to this drop line-based amortization you should be watchful of during the loan period include the following
Drop line balance: It is a running loan amount which keeps on dropping over the tenure.
Utilized amount: Amount utilized by you i.e the principal outstanding
Available balance: This is the difference between dropline balance and utilized amount that you can draw down.
The benefit of such a feature is compounded by supplementary facilities: for instance, when you avail a Loan Against Property from Finserv MARKETS, it allows RTGS so you are easily able to male pre-payments through net banking. The customer portal also allows ease and seamlessness to conduct transactions related to draw down and borrow back.
You can apply for a Loan against Property with Finserv MARKETS and make use of this feature.
The portal also offers additional tools like a property dossier, a customized report that educates you about the legal and technical aspects of owning property; high-value top-up loans against the current loan, among other things. As an existing LAP customer, you can avail the unique flexi saver facility discussed above, and the provision of a loan against property balance transfer facility on an existing Bajaj Finserv Loan Against Property, along with online account management make things seamless and efficient.
As long as the title of the property is clear, free of any litigation, and has no existing equitable mortgage or loan, the process of availing such a loan is straightforward.
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!