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Loan Against Property
A Loan Against Property (LAP), also known as a mortgage loan, is a type of secured loan offered by financial institutions where borrowers pledge their property, typically residential or commercial, as collateral to secure a loan. This type of loan allows property owners to unlock the value of their property and obtain funds for various purposes while retaining ownership of the property.
The loan amount sanctioned is determined based on the market value of the property being pledged, along with other factors such as the borrower’s income, repayment capacity, and credit history. Generally, lenders offer loan amounts ranging from 50% to 70% of the property’s market value.
Loan Against Property offers longer repayment tenures, often extending up to 15 to 20 years, which helps borrowers manage their repayment obligations more comfortably. The interest rates on LAP are typically lower compared to unsecured loans since the property serves as collateral, reducing the lender’s risk.
Borrowers can utilize the funds obtained through a Loan Against Property for various purposes, including business expansion, debt consolidation, education expenses, medical emergencies, home renovations, or other personal financial needs. However, it’s crucial for borrowers to make timely repayments to avoid the risk of losing their property due to default on the loan.