Among a dozen different credit schemes, a relatively popular one is a loan against property or mortgage. The scheme allows the borrower to borrow a comparatively larger sum which can be utilized for infinite reasons except those prohibited as per the contract. Besides, there are numerous other benefits of a loan against property over other credit schemes that make it an attractive solution. Let’s take a look at some of the prominent advantages of loan against property.
Lower interest rate:
A loan against property falls under the secured loan category. Owing to that, a Loan Against Property is offered at a relatively lower interest rate in comparison to conventional unsecured loans.
Higher repayment tenor:
A loan against property is offered against the value of the property submitted as a collateral. Hence, the lender – a bank or an NBFC is under a relatively lower risk. Therefore, the lender offers the borrower a longer repayment tenor to settle the debt so as to minimize the pressure of EMI on them and make the process easier.
Like other traditional schemes offered against a collateral like home loan, secured business loan etc. have a defined purpose. The capital borrowed from the above schemes can’t be used for any reason other than the specified ones. Whereas, a loan against a property is just the opposite in terms of usage flexibility. A loan against property, once approved, can be used by the borrower for almost anything at all except the ones prohibited as per the contract.
Loan Against Collateral 