When you take a loan by mortgaging your property as security then it is known as Loan Against Property (LAP). The property that you keep can be commercial or a residential property. LAP is the safest and secured term of the loan for the bank, as the assurance is a property of the owner. This loan can be taken for educating children, business start-up, marriage, or any other personal reason. This form of loan falls under secured loan as you pledge your property as the security. The loan amount is decided based on the current market value of the property you pledge.
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What is Loan Against Property?
LAP or Mortgage Loan is a loan availed by keeping the residential/commercial property as collateral. The value of the mortgaged property decides the amount of potential loan you can be sanctioned. One can unlock the financial potential of the property owned without need to dispose of it through LAP.
Who can avail LAP?
Any individual owning a property and derives income from the lawful activity is eligible for an LAP.
The following types of individuals are perfectly eligible for availing LAP:
· Sole Proprietorship or Professionals acting individually
· Partnerships firms or Limited Liability Partnerships
· Salaried Individuals
· Trust and society
· Private and Public Limited Companies
Below are the types of properties eligible for availing LAP:
Overdraft facility provides the flexibility to the loan borrower to withdraw cash from his account through cheques or other withdrawal processes whenever there is a requirement. The credit extended by the lender is up to a particular limit known as the overdraft limit. When that limit is exceeded, the borrower will not be able to withdraw money anymore.
The arrangement of paying the interests is similar to the other forms of loan. As the overdrafts are of revolving nature, so instead of repaying the borrowed amount within a fixed period of time, the borrower can keep on borrowing the money and repaying it simultaneously. This is the reason why overdraft is also referred to as the revolving line of credit. Under Drop Down OD facility, the overdraft limit decreases with a certain amount or percentage of the original limit either monthly/quarterly/half-yearly/yearly, and thus at the end of the tenure the limit is zeroed, and the loan is completely repaid. One major benefit of having overdraft is that the borrower can park his free fund in an overdraft account and save on interest outlay.
The minimum and maximum age needed for the borrower
The age group for borrowing credit facilities is between 21 and 65 years. The maximum age of 65 should be at the time of maturity of the loan.