When you’re in need of a substantial amount of money, a Loan Against Property (LAP) can be a practical solution. However, many people hesitate to explore this option due to various misconceptions. In this blog, we’ll debunk some of the most common myths surrounding Loan Against Property, so you can make an informed decision with Suvidha Finance.

1. You’ll Lose Your Property if You Take a Loan Against It

One of the biggest fears people have is that they will lose their property if they take a Loan Against Property. This is not true unless you fail to repay the loan. The property remains yours throughout the tenure of the loan. Lenders hold it as collateral but will only take action if there is a consistent failure in repayment. As long as you are diligent with your EMIs, your property is safe.

2. Loan Against Property is Only for Business Needs

Many believe that LAP is solely for business or commercial purposes. However, this type of loan can be used for various personal needs, such as funding your child’s education, paying medical bills, renovating your home, or even for weddings. The loan offers flexibility, allowing borrowers to use it for any major financial requirement.

3. You Can Only Use Residential Property as Collateral

This is another common misconception. Loan Against Property can be secured against various types of properties, including commercial, residential, and even industrial properties in some cases. The type of property you pledge will depend on the lender’s policies, but you’re not restricted to just residential property.

4. The Loan Amount is Limited to 50% of Your Property’s Value

While it’s true that the loan amount is linked to the value of the property, lenders typically offer loans ranging from 60% to 80% of the market value of the property, depending on various factors such as the borrower’s credit score, the property’s location, and its condition. It’s always a good idea to get your property evaluated by the lender to know the exact amount you qualify for.

5. Loan Against Property is Hard to Get Approved

People often think that securing a Loan Against Property involves excessive paperwork and a lengthy approval process. In reality, LAP approval is usually quicker than unsecured loans like personal loans because the loan is backed by collateral. If you have the required documents and a stable financial profile, the approval process can be smooth and swift.

6. The Interest Rate is Always Higher

This is a myth that prevents many potential borrowers from exploring LAP. In fact, the interest rates for Loan Against Property are generally lower than those for personal loans, as they are secured by property. The interest rates may vary depending on the lender and your credit profile, but they are often competitive and affordable, especially for long tenures.

7. You Can’t Sell Your Property While the Loan is Active

Many borrowers think that once they pledge their property as collateral for a loan, they cannot sell it until the loan is fully repaid. This is not true. You can sell your property, but you will need to first clear the outstanding loan amount. In some cases, the buyer may take over the loan or pay the outstanding amount directly to the lender.

8. You Need a High Credit Score to Qualify

While having a good credit score is important for any loan, it’s not the sole factor in Loan Against Property approval. Since this is a secured loan, the value of the property you pledge also plays a significant role in determining your eligibility. A lender may offer better terms if you have a strong credit score, but borrowers with moderate scores can still qualify based on their property’s value.

Final Thoughts

Loan Against Property is a versatile and powerful financial tool when used correctly. However, misconceptions often prevent people from exploring it as a viable option. Now that we’ve debunked these common myths, you can make a more informed decision regarding your financial needs. If you’re looking for a Loan Against Property, Suvidha Finance can guide you through the process and offer a solution that best fits your needs.

For more information, reach out to Suvidha Finance:

• Phone: +91 83970 44041
• Mail: info@suvidhafinance.com
• Website: suvidhafinance.in