How to manage your finances with the property you own

Savings is our part of life. Right from childhood our parents teach us the value of savings time-on-time basis so that you utilize it during any emergency in future. No matter how meticulously an individual saves, at times when your finances are strained you’ll need some help to tide over safely on to the shore. Borrowing from family or friends is an alternate option but again there is fear of rift is associated if not paid on time. If the money you need is large such as for child education, sending them for higher studies, medical treatment, or other emergency it becomes stressful to manage finances. Relax! A better option would be to leverage an asset you own – your house.

Today, leading banks and finance companies offer loan against property (lap) so that you can use your house as collateral to take a loan from a bank.  LAP is given against the mortgage of property. It is provided at a certain percentage of your property’s market value. It usually stands around 40 to 60% of your property value in the market. Property loans help you leverage the economic worth of your home along with continuing to enjoy occupancy of the same, so that you get immediate finance to meet a variety of personal and business needs.

Loan against property are avail for fully constructed, freehold residential and commercial properties for: business needs, marriage, medical expenses and other personal needs. You may also transfer your outstanding loan availed from another bank / financial company.

In today’s time traditional finance come at extremely high rate of interest, stringent measures to pay and less time duration to clear of the debt. But taking a loan against property is certainly cheaper than a traditional loan, where interest rates are as low as 10 to 13%.  Since these are secured form of loans you can get a higher amount than the one you will get for an unsecured loan like a personal loan. Ofcourse, every bank will also have small processing fee of around 0.50% of the loan amount. For better understanding you can always visit relevant site and make sure the mandatory documents are available at the earliest for application.

The loan offered by a bank will vary from person to person since it depends on various factors, including the work profile and age of the borrower. Typically, the income proof for three years is required to have the loan against property and the minimum age is around 24 years. Lenders prefer that the loan be fully repaid while the borrower is employed, so the maximum age till loan maturity in case of a salaried person is 60 years and for self-employed its 65 years.

Your credit history counts a lot when it comes to avail property loan. It is extremely important that you have a good credit score rating to avail any form of loan. Before, lending out the loan, banks have a background check of your credit history through a Credit Information Company like CIBIL (Credit Information Bureau India Ltd.) and go through your repayment track record. Based on your credit score banks will ascertain your repayment capacity. Your defaulting on any bill payment will reduce your chances of getting a loan. After the bank is satisfied with the paperwork, it will offer you the loan, which will typically range from 40-70% of the value of the property.