Starting a business is a big decision and involves a large capital. In case you are unable to generate sufficient funds, this can push you to reconsider your decision. However, there is nothing to worry about. There are numerous ways to borrow money, including project loans, home loans, overdraft protection, LAP, etc.
Loan Against Property (LAP) is one of the popular methods for securing funds. LAP is a loan secured by real estate or property. Here, the borrower offers the lender the title to their property in exchange for a loan amount with a certain interest rate to be repaid over predetermined time intervals. Mortgage refers to transferring title to the property as collateral for a debt.
Starting your business is one of the many uses of this property loan. Additionally, it is frequently used for business development, promotion, and expansion. Both residential and commercial properties are eligible for a loan against property.
Benefits of LAP
Here are some benefits of taking out a loan against property to launch a business:
Highly affordable interest rates
As already established, a loan against property is a secured loan. As a result, loan against property interest rates are considerably lower than those for other loans, such as personal loans. The benefit of this feature is that your EMIs are lower. You can manage the financial aspects of your company with relative simplicity and without dipping into your savings.
Longer repayment term
A property loan typically offers a long repayment tenure. Depending on the lender you select, it might be anywhere between 1 to 15 years. When launching a new business, a longer loan payback term is quite helpful because it takes time for your business to establish. In addition, the pressure of repayment is minimised because the EMIs are comparatively lesser.
Extensive eligibility requirements
To be eligible for LAP, you must complete a few simple requirements. Both self-employed professionals and non-professionals are eligible for the loan. You must be at least 21 years old and no older than 65 when the loan matures. The lender can also require you to provide proof of your monthly income and qualifying statements.
The ability to utilise the potential of your asset is the biggest advantage of taking out a loan against your property to launch your new business. You continue to own and use the property or land despite being collateral for your loan.
LAP interest rates are also influenced by the kind of property you want to mortgage, its current market worth, the available documentation, your income, etc. A loan EMI calculator can be used to determine your monthly payment amount.
Get the most value with a Fullerton India Loan Against Property and benefit from low-interest rates, flexible repayment terms, and long repayment periods. The procedure is easy, hassle-free, and simple.
Eligibility Requirements for LAP
- You must be the legal owner of the residential or commercial property, and there should be no outstanding mortgage or legal liabilities associated with it.
- Salaried individuals should be between 21 years and 60 years of age.
- Self-employed individuals should be between 25 and 65 years of age.
- SME (Small medium Enterprise) should be a minimum of 2 years old
- A credit score of 700 and more is preferred.
Residential properties are eligible for loans up to 60% of the property’s value. This increases to 70% of the property value for commercial properties. For instance, if your property is worth Rs. 1,000,000, the maximum loan amount for a residential property is Rs 60,00,000, and the maximum for a commercial property is Rs. 70,00,000.
Note: SME applicants must provide proof of consistent profits over the last two years and undergo an audit by a professional accountant.
You can efficiently meet your business needs with a property mortgage loan. Make sure you complete the required paperwork and stay aware of the terms and conditions. You may get a better idea of how well this type of loan can work for you by using a LAP EMI calculator to compare loans against property rates.