Check facts and myths associated with loans against property in India

A loan against property (LAP) enables you to leverage the assets you have and use them as collateral to borrow money from a bank or financial institution for meeting financial needs. With many banks and NBFCs offering LAP at competitive interest rates, it proves to be a good choice to fund business or personal needs. Owing to its secured nature, many financial advisors believe a loan against property to be a better option than a personal loan. However, before you consider applying for a loan against property for business or personal use, it would be ideal to stay aware of these myths.

Myth 1: You Cannot Use the Property that You Have Pledged

The biggest myth regarding a loan against property is that you cannot stay in the property you have pledged as collateral. As long as you clear your EMIs as per the schedule and do not default on repayments, there is no issue.

Thus, before you apply for LAP, using the EMI calculator, you can analyse an approximate EMI against a loan of a specific amount. This way, you can calculate whether you will be able to pay the EMIs. If in case you default on your payments, lenders have the right to auction your property and recover outstanding dues.

Myth 2: You Need to Fall into a High-Income Bracket to Apply for LAP

Your income does play an important role when availing of a loan against property for personal or business use, but it is not the only condition. While high income is a bonus, even if you fall in the moderate-income bracket, you can qualify for LAP. You need to be able to assure your lender that you have a repayment plan in place and that there are no chances of defaulting on payments. Ensure you have minimum liabilities and that all your monthly EMIs are paid on time during the loan tenure.

Myth 3: The End Usage of Funds is Restricted

A lot of us believe that loans against property involve limitations with respect to the usage of funds. But, like other borrowing options such as top-up home loans, personal loans, and gold loans, a loan against property does not restrict the borrower from using surplus funds for other reasons, except for illegal or speculative purposes. The surplus loan amount can be directed towards your child’s education, business establishment, or working capital needs.

Myth 4: The Approval Process is a Hassle

This is another popular myth about loans against property. Just like other loans, a borrower can avail of a property loan immediately after all essential documents like identity proof, age proof, address proof, and income proof are submitted along with the application form.

In fact, if you are looking to apply for a loan against property from a lender like DMI Housing Finance, you may do so from comfort of your home using DMI Customer Portal . In turn, get access to a range of benefits like approval of maximum loan amount, zero hidden charges, affordable interest rates, and the quick processing.

Myth 5: Loan Against Property is Not a Safe Option

If you meet the eligibility criteria, availing of a property loan is absolutely safe. When you pay the EMIs on time without defaulting, your existing property will never be at risk. In fact, as soon as you have repaid the entire loan amount, the lender will grant you the property papers.

But here’s something you must remember when you apply for a loan against property, choose an EMI amount that you feel you can pay off easily. Defaulting on even a single EMI can affect your credit score, hampering your profile from a long-term perspective.

Myth 6: You can Pledge only a Residential Property

This is a common misconception floating among loan seekers. It is believed that LAP can only be availed against residential property. This is not true. You can be eligible for LAP, irrespective of whether you own a residential property, commercial, or lease-rent, depending on the lender.

Takeaway

A loan against property is highly beneficial and you can avail of it for business or personal needs. Flexible EMIs and longer loan tenures are key benefits of loans against property. The interest rates offered are attractive too. Most importantly, one can apply for a loan against property online, as well as offline, by visiting the branch of DMI Housing Finance. Overall, a loan against property is an excellent option if you understand the product well and seek clarity on the myths floating around.

DMI Housing Finance offers great benefits on loans against property and other financial products. Check for your eligibility for any one of the offers by submitting your basic details. You can use our branch locator to find a branch closest to your home. If you want to apply for a loan against property online, you can visit the DMI customer portal customer portal today and choose a loan plan as per your requirements. For any questions, you can also call us at 18001214214 or write to us at customercare@dmihousingfinance.in. For a new home loan, give us a missed call on 9772027704.