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6 myths about Loan Against Property busted

  • 3 min read

  • Highlights

  • Pledged property can be used during the tenor

  • You can avail a loan against property for any property

  • A loan against property has simple eligibility criteria

  • Having high income is not an eligibility criterion

A loan against property offers considerable funds that can help you purchase factory space, finance your child’s education abroad, fund a wedding in the family, or use it to consolidate debt. But, before you take this loan, it is important to ensure that you aren’t falling prey to the many myths that shroud it. So, to ensure that you’re basing your decision entirely on facts, here’s a look at 6 myths about loans against property, and the truth behind them.

Myth 1: You cannot use the property that you pledge

It is often believed that you can’t use the property that you pledge when taking a loan against property. This is completely false. You have complete freedom to use the property that you have secured funds againstthroughout the tenor of your loan. The property will only come under the financial institution’s ownership if you default on your loan. In this case, the lender has the right to sell the property to raise funds from it.

Myth 2: You can borrow a loan amounting to the full value of the property

Your pledged property’s total value will never be given to you in the form of a loan. In most cases, lenders give 70% to 90% of the value as a loan, though the exact figure depends on its resale value and the lender’s policies. So, estimate the value of the property that you are planning to pledge, and accordingly arrive at the approximate value of the loan.

Myth 3: You can only get a loan against a residential property

This is far from the truth. You can receive a loan against property by pledging either a commercial property or a residential property.In turn, you can use the loan against property to buy commercial or residential property or for lease rent discounting.
When you take this loan from Bajaj Finserv, a fourth option is available to you. You can get funds in the form of a Flexi Loan that you can use as you deem fit. With this facility, you can withdraw funds from the total loan amount as and when you need to, and pay interest only on what you use. You can also choose to pay interest-only EMIs and repay the principal at the end of the tenor. You can withdraw, repay, and re-draw funds as many times as you want to during the tenor, and you don’t have to worry about filing a fresh loan application each time.So, opt for a Loan Against Property from Bajaj Finserv and make the most of the Flexi Loan facility, nominal rate of interest, flexible tenor,andquick approval

Myth 4: You need to be of a high-income bracket to apply for the loan

Although your income does affect your loan application’s approval, as it determines your repayment ability, it is not a hard and fast rule for you to fall under a high-income bracket to avail the loan. You can avail this loan as long as you can show the lender how your will organise finance for repayment.

Myth 5: The loan hasa high rate of interest

The interest rate over the loan against property depends on various factors like the lender you choose, your credit score, the value,the condition of your property, etc. By and large, these loans are secured and so, they have an affordable rate of interest that you can repay over a lengthy tenor.Maintain a good credit score and pledge a high-value property to ensure that you get a good interest rate.

Myth 6: Ithas a tough application procedure and difficult to match eligibility criteria

On the contrary, these loans have simple eligibility criteria since you pledge a collateral, as compared to many other unsecured loans. As long as you are a resident of India, at least 25 years old and are self-employed or a salaried individual, you can avail this loan. Besides, most lenders allow you to apply offline or online via a simple application procedure that involves filling a form, awaiting approval, submitting documents, and disbursal. Armed with these facts you can make an informed decision about applying for a loan against property, without letting myths cloud your decision.

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