Yes, it is economical to take a loan against property. A loan against property is a secured loan and thus entails a lower interest rate than unsecured loans. This is very beneficial for a customer as a lot of money is saved on interest. Also, loan against property has long tenures that can be chosen based on the customers preference.
Why is a loan against property economical?
1 Low interest rates –Interest rates for a loan against property begin at just 8.50% and can increase based on factors like value of the property, loan amount and ability to repay the loan.
2 Minimal documentation – There is very minimal documentation needed for a loan against property. Apart from one’s ID proof and address proof, only the documents for the property must be turned in to the lender.
3 Tenures – Tenures for a loan against property can extend up to 15 years or longer in some cases. This is beneficial for individuals who would like to pay smaller EMIs over a longer period.
4 No income proof needed – As loan against property is a secured loan, most lenders do not check for income proof. This is a very big benefit for unemployed individuals who are in urgent need for funds.
5 Credit score not needed – Most lenders do not check credit score and credit history as it is a secured loan. So, if you have a bad credit score or are new to credit, a loan against property is very beneficial.
6 Safety of property – The property is temporarily kept under the name of the lender and will be given back to the customer once the loan is repaid in full. All the ownership names are transferred back to the customer without any setbacks.
Documents needed:
1 Identity proof
• Passport
• Voter’s ID
2 Address proof
• Aadhar card
• Ration Card
• Telephone Bill
• Electricity Bill
3 Bank statements for the last 6 months
4 Pay slip or form 16
5 Copies of all the property documents for the property that is to be pledged for the loan amount
The documents needed can also vary from bank to bank and thus, it is essential to check what is required from the bank that one wishes to borrow from.