You have probably heard of a loan secured by property. Perhaps you have already chosen to take out this loan. However, one thing is sure: when you apply for this borrowing option, you may have a number of misconceptions regarding the loan. In order to ensure you never face such confusion again, today, we will unravel and demystify 12 prevalent myths associated with Loan Against Property.

Myth 1: LAP is exclusively for business owners

Anyone, not just business owners, can get a Loan Against Property. In this loan, you use your property as security, and it is not limited to business people. For example, if you own a house, you can use it to get a loan for various reasons.

Myth 2: Your property is at immediate risk

When you get a Loan Against Property, you do not lose your property right away. It is more like a backup plan for the lender if you can’t repay. They might sell the property only if you consistently can’t make payments and they have tried to work things out with you.

Myth 3: LAP is only applicable to residential properties

LAP can be availed against residential and commercial properties, giving borrowers flexibility in their choices.

Myth 4: Longer loan tenure means paying significantly more interest

While it is true that longer tenures may accumulate more interest, they also result in lower monthly instalments, easing the burden on your finances.

Myth 5: Prepayment incurs hefty penalties

Many lenders permit prepayment with minimal or no penalties. Reviewing the terms and conditions before finalising your plot loan is crucial to understand the prepayment options available.

Myth 6: LAP approval is a prolonged process

With streamlined processes and the advent of online applications, LAP approval is faster than you might anticipate. Numerous lenders offer quick approvals to cater to urgent financial needs.

Myth 7: Interest rates are fixed and non-negotiable

Interest rates are negotiable. Research and negotiation with your lender can help you secure a more favourable rate based on your financial standing.

Myth 8: LAP is exclusively for substantial financial needs

LAP can serve various purposes, including education, medical emergencies, or consolidating high-interest debts. It is not limited to major financial requirements.

Myth 9: Only high-value properties qualify for LAP

Lenders consider properties of varying values for LAP. The loan amount is contingent on the property’s market value and your repayment capacity.

Myth 10: LAP is the last resort for those with poor credit

While a good credit score enhances your approval chances, individuals with lower credit scores can still qualify for LAP, albeit with slightly higher interest rates.

Myth 11: LAP is only for older individuals

LAP eligibility is based on income, property value, and repayment capacity, not age. Younger individuals can also benefit from LAP.

Myth 12: LAP is indistinguishable from a personal loan

With a personal loan, the lender gives you money based on your creditworthiness. But with LAP, you use your property (like a house) as security. So, if you can’t repay a personal loan, the lender can’t take your property. But with LAP, there is a risk to your property if you can’t keep up with payments. They are similar in that they both provide funds, but the way they are secured is different.

Conclusion

Now armed with the truth, you can make an informed decision about opting for a Loan Against Property. Understanding the facts is pivotal when navigating financial decisions. So, don’t wait now; get this loan today and fulfill your dreams.