Generally, for emergency financial requirements, you can opt for a personal loan. The personal loans are the most preferred option as it doesn’t require collateral against the loan and you just have to fulfil eligibility criteria for these type loans. If you require a higher fund, then the most recommended option is to apply for a Loan Against Property. However, most of the people refrain from applying for such due to some misconceptions regarding LAP. People have an option and can opt for loan against property apply online which sounds to be a favorable option.
However, most of these misconceptions arise due to a lack of complete knowledge about LAP. Here a few popular misconceptions and explanation which will help you to understand how LAP can be helpful for you –
Loan Can Only Be Available Against Residential Property
The most common and popular misconceptions are that the borrowers have to pledge their residential property for getting the loan. However, it is the wrong concept, as these types of loan allow you to pledge both commercial and residential property against the loan.
Only The Borrower With High Income Are Eligible For LAP
Another popular myth regarding LAP is that you need to have a high salary income for being able to avail loan against property. The loan providers have a fixed set of rules regarding income eligibility for both salaried and self-employed individuals. Though if you can convince the loan providers about your repayment capacity, it doesn’t matter if your income is high or not.
Loan Against Property Charge High Rate Of Interest
With the increasing price of property nowadays, the amount of loan available against property is also high. The high amount of loan creates a misunderstanding among the people that the rate of interest in such loans is also high. However, you need to understand that the interest of LAP depends on numerous factors like the amount of the loan, repaying period, type of property, the net value of the property, etc.
Pledged Property Can’t be Used
It is a common fear among most of the borrowers that if they mortgage the property for a loan, then they will not be able to use it further. However, this concept is completely wrong. Even if you raise a loan against your property, you are free to use whenever and however you want. Most people pledge their residential and commercial buildings for a loan, so they fear losing their shop. But you need not have to worry about losing your property unless and until become a defaulter for not paying EMIs.
Approval Of The Loan Is Complicated Process
Most people tend to compare the application process for a personal loan with the application process for the loan against property. It leads to a conception that LAP is more complicated and time taking process than general personal loans. Though it is not the complete truth as if you fulfil all the loan providers’ criteria, you easily avail the loan. Many loan providers even offer online application processes which help the borrower to assess them whenever and wherever they want.
Loan Is Only Available For Full Value Of The Property
It is a common misconception among people that the amount of loan avail against the property is equal to the value of the entire property. However, there are no loan providers who will ever provide a loan equal to the full value of the property. The maximum amount of loan against property that most loan providers will avail is equal to the property’s 70%-90% value.
Thus, if you plan to apply for a LAP, you should free yourself from the myths mentioned above regarding loan against property.