In today’s world, everyone needs funds for various reasons such as buying a house, medical emergencies, marriage expenses, and much more. Loan Against Property (LAP) is one such option that people opt for when they need higher funds at a lower interest rate. In this article, we will discuss LAP, its interest rate, and how to apply for it.
What is Loan Against Property?
A loan against Property is a secured loan, where the borrower pledges a residential, commercial or industrial property as collateral. It is typically taken for a higher amount of funds than personal loans and at lower interest rates. The amount of loan against property depends on the market value of the property, and banks can provide up to 60% of the property value as a loan amount.
What is Mortgage Loan?
A mortgage loan is a type of loan used to purchase a property, where the property itself acts as collateral for the loan. The borrower is required to repay the loan amount with interest over a set period.
Mortgage loans are typically offered by banks and financial institutions and are secured loans. The interest rates on mortgages are usually lower than those on personal loans, as the property acts as collateral, thereby reducing the risk for the lender.
What are Mortgage Loan Interest Rates
Do you know mortgage loan interest depend on several factors, including the loan amount, repayment tenure, type of property being mortgaged, and the borrower’s credit history? Depending on the bank or financial institution, the interest rate may be fixed or floating.
The interest rate on mortgages varies from bank to bank, but it typically ranges between 8-10% per annum. For example, if the loan amount is Rs. 50 lakh and the interest rate is 9%, the borrower would repay Rs. 93.14 lacks over 20 years.
How to Apply for Mortgage Loan
If you are planning to apply for a mortgage loan, follow these simple steps:
- Check Your Eligibility Criteria: Before applying for a mortgage loan, you must check your eligibility criteria, such as age, income, occupation, and credit score. You can check your eligibility on the website of the bank or financial institution you want to apply to.
- Gather all the Documents: You will need to submit various documents along with your application, which includes identity proof, address proof, income proof, property documents, and photographs. Make sure to gather all the required documents before applying for the loan.
- Compare the Interest Rates: Compare the interest rates offered by different banks or financial institutions to get the best deal. You can use an online mortgage loan calculator to calculate the EMI and total interest payable for different loan amounts and durations.
- Fill out the Application Form: Once you have chosen the bank or financial institution, visit their website or branch to fill out the application form. Make sure to fill out all the required details correctly.
- Submit the Documents: Attach all the required documents with the application form and submit them to the bank or financial institution.
- Wait for Approval: Your loan application will be reviewe by the bank or financial institution, and they will inform you of the status of your application. If approve, the loan amount will be disburse to your account.
Know More About Mortgage Loan Calculator
A mortgage loan calculator is a handy tool that helps you calculate the EMI and total interest payable on a mortgage loan. To use a mortgage loan calculator, you must enter the loan amount, interest rate, and repayment tenure. The calculator will then display the EMI amount and total interest payable for the loan.
Conclusion
Loan Against Property (LAP) is an excellent option for people who need higher funds at a lower interest rate. It is a secure loan, where the borrower pledges a property as collateral. The interest rates on LAP and mortgage loans are typically lower than those on personal loans. If you are planning to apply for a mortgage loan, make sure to check your eligibility criteria, compare the interest rates offere by different banks or financial institutions, and use an online mortgage loan calculator to calculate the EMI and total interest payable.
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