Tuesday 9 February 2016

When must you opt for a Loan against Property?

Lenders are seeing a steady growth in the loan against property segment. Most borrowers are opting for this facility as it is a secured loan and it attracts a lower rate of interest. The loan amount depends mainly on the value of the property that is determined by its location and age of the property and the quality of construction.
Over the past 3-4 years, the loan against property segment has grown at a compounded rate and now stands at Rs.2.3 trillion.

The loan against property must be opted when you are in dire need of a huge amount of cash. Most commercial loans are offered at a higher rate of interest and since this is a secured loan, you can get it for a reasonable rate of interest. The loan tenure offered ranges between 10-15 years which puts less burden on its repayment.


Most individuals take a property first to ensure that their future is secured and the property usually just sits idle most of the time. Loan against property enables you to unlock its potential and the huge loan amount can be used to finance your business or meet any big expenditure that you have. But it is advisable that you take a loan against property to expand your business instead of starting it. Starting a business could go either ways, so it is best to know that you can make profit out of it and you must be confident that the returns that you get after the expansion will help you clear out the loan.

Having said that, it is a risky decision that you take. If you are unable to repay the loan or if you default on the installment amount, your credit score will be affected badly and that makes it very difficult for you to take any further loans with ease and for a reasonable interest rate. Always ensure that you are in position that the loan can be repaid on time and that you have enough flow of income or flow of cash from your business. Take care of the loan first. Servicing the loan is very important. If you are coming across a huge profit or an extra income, clear off the loan before you do anything, because the sooner you get it cleared, the better it is for you.

Defaulting in making payments for the loan will lead to the lender seizing your property that took years to build. You share memories and sentiments with the property, so it is very important that you take the loan seriously and work towards clearing it off at the earliest. 

4 comments:

  1. Hey Thanks for sharing this informative blog it seems very helpful. i was looking for same kind of content about Loan Against Property

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