LAP has nowadays become a standard tool to manage any large financial requirements without much hassle. However, some people still hold themselves back from opting for it due to the common misconceptions spread in the market. If you are also one of these people, you need to change your mind right away.
Here we will be bursting six myths about the loan that will show you how it is different from what you heard about it. Thus, you will be able to benefit from it instead of fearing it. You can apply for a loan against property here: https://www.fullertonindia.com/loan-against-property.aspx
Common Myths of Loan Against Property
Myth 1: You Can’t Use The Money According To Your Needs
People think a loan against property is just like a car or home loan. It doesn’t let you use the funds according to your own wish. However, it is the exact opposite in reality. Once you get the money, you can use it for various purposes, such as:
- Home renovation
- Child’s higher education
- Child’s wedding
- Business expansion
And the list goes on.
It means there is no restriction on how you can use the money. Still, you have to remember that it can’t be used for illegal or dangerous purposes. Other than that, you can spend it however you want.
Myth 2: You Can Get Up To 100% Of The Property Value
People often think that they can easily avail of the total value of their property through a LAP. However, that isn’t true. No matter how valuable your property is to you, it may not stand at a high point in the market. Lenders usually consider various aspects like:
- Property’s age
- Its location
- Its construction
- Its infrastructure
Etc.
Based on these factors, they may offer you 50-70% of the total value. If you chose the correct lender, the percentage might go a little higher, but it won’t touch the 100% mark. So it will be best if you keep this in mind while going for the loan.
Myth 3: The Available Tenures Are Shorter For LAP
Tenure is the term for which you borrow the amount. This duration doesn’t only determine the repayment period, but the EMI amount is also based on that. It is one of the primary reasons why people opt for longer tenures because it makes their repayment convenient. You can do this in the case of LAP, as well. The term for the loan can go up to 20 years. Hence, you can opt for a longer period of repayment to reduce your EMI amounts significantly.
Myth 4: You Can’t Use The Collateral Property
Many people don’t opt for a LAP because they think it will take their rights over it. However, that is far from the truth. In reality, you keep the complete possession of the property kept as collateral under the loan. It means you can conveniently live in it or rent it out without any worries.
Myth 5: Loan Amount Is Determined Based On The Property’s Purchase Price
The loan amount gets calculated based on the present market value and condition of the property and not the price you brought it for. As stated earlier, the lenders go through various aspects of the property before determining its value. The purchase price isn’t one of these factors.
Myth 6: LAP Is Available Only On Residential Property
This isn’t entirely false because some lenders do accept only a residential property as collateral. However, most lenders have now begun offering loans on commercial as well as industrial properties. So you just have to find the correct lender and provide them with all the loans against property documents required.
We hope now the concept of LAP must have been cleared out to you. If you think the loan fits well into your requirements, you should choose a reliable lender and get the funds quickly.