It is a loan where the borrower takes a loan from bank of financial institution where the security of the loan is the property owned by the borrower. It can be availed for variety of purposes such as purchase of machinery, working capital requirements, home renovation, medical needs, and so on. It can be availed against both residential and commercial property. Property needs to be approved for lending as per the respective lender’s policy.
This facility is one of the best options for borrowers as there is no requirement of selling the property. In spite of mortgaging the property borrower can utilize it. Lenders usually maintain a margin while sanctioning a Loan against Property (also known as LTV or Loan-to-Value).This margin usually ranges from 50-70% of the property value
Loan against property is an excellent debt consolidation tool. It is much cheaper than unsecured loans and can be used to consolidate all the existing loans at a much lower EMI.
