Common Myths About Loan Against Property Busted

Introduction

People tend to have assumptions and misconceptions about things or concepts they don’t fully understand or know about. A prime example for the same will be Loan Against property which may not be as widely discussed or promoted as other loan options. The lack of clear information coupled with assumptions can lead to them believing in myths or forming their own misconceptions. As a result, people may miss out on beneficial financial services simply due to lack of clarity.

Here are some common myths about Loan Against Property busted.

Myth 1: Losing Ownership of property

People tend to assume that once they use their property as collateral for loans, they lose their ownership to it.

This is not true. LAP allows you complete ownership of your property. Your property is Mortgaged to secure your loan. It acts as a guarantee against the loan you take. This provides the lender only with security and not ownership.

As long as you pay your loans back on time, your property will continue to stay under your ownership. Hence with LAP you own your property while securing the funds you might need using it.

Myth 2: Applicable only for residential property

Another assumption about LAP is that one can secure it only by using residential property as collateral.

LAP can be taken by pledging a variety of property that include Commercial Property like Showrooms, Warehouses, Godowns, Industrial Property like Factories, Manufacturing Units, etc.

The only requirements are that the property be owned by the borrower and is free from any litigation or existing mortgage.

Myth 3: Complex Application Process

Many people believe that the application process to acquire a Loan Against Property is very complex and time consuming.

This is not correct. The process to get a LAP is streamlined and the lenders guide you through every step. With proper documentation LAP approval can be pretty simple. The digitalisation of the process has only made it easier.

Myth 4:  Risky for Borrowers

Another common misconception is that Borrowers face high risk if they choose LAP. This is mostly due to the fact that one has to Mortgage their property in order to secure the loan.

The collateral actually reduces risk for lenders and poses almost no risk for borrowers. The interest rates are much lower than any other type of loan due to the collateral. The only risk the borrowers face is the confiscation of their property upon not paying back the loan.

Myth 5: LAP is meant for emergencies

A lot of people believe that LAP is meant for emergencies and should be used as a last option resort. This however is very untrue.

LAP is a very versatile financial tool which can be used for almost anything. It could be to buy another property, finance your dream vehicle, fund your children’s education, expand your business etc. It is a reliable source of credit at very competitive interest rates.

Its flexibility makes it ideal for both long term and short-term financial needs.

Myth 6: Meant for only Salaried individuals

Another misconception about LAP is that only salaried individuals are eligible to apply for one. This is very inaccurate.

Both self-employed and Business people benefit from LAP. All you have to do is show the stability of your income. Anyone can reap the benefits of LAP regardless of how they are employed.

Myth 7: High interest rates

People blindly believe that taking a loan is equal to paying sky high interest rates. This is very untrue in the case of LAP.

LAP offer’s interest rates that are lower than other type of loans. This is due to the increased security for lenders from the Mortgaged property. The reduction in risk for lenders have resulted in competitive interest rates.

Conclusion

Loan Against property is a very beneficial financial tool that offers credit at competitive interest rates and flexible payment periods. These common myths and misconceptions have been stopping people from taking advantage of this mode of finance.

It is essential to do your research before making any financial decisions. Do not let your assumptions hold you back because when used properly Loan Against Property is a powerful financial tool that can help finance you dreams.