Loan Against Property : A Multi-Purpose Loan
After completing his medical studies, Dr. Karan George returned to his hometown to start his own medical practice. While he had the property, he had limited funds for medical equipment and hiring employees. To overcome this issue, Dr. Karan decided to mortgage his ancestral property for a loan.
Mortgaging your property to set up or expand your business is commonly known as Loan against Property (LAP).
Let’s look at the features and benefits of loan against property (LAP):
Features of Loan Against Property:
With LAP, you could mortgage either your residential or commercial property. You could get up to 70% of your property value as loan. If your property value increases during the loan tenor, you could even apply for a top-up amount.
The loan tenor is usually between 5 and 15 years. During this tenor, you can make a partial repayment. Also, if you get a huge bonus, you could easily foreclose the loan as well.
Additionally, if the property is co-owned, the co-owner could also become a co-applicant. The ownership of the property remains with you. However, please note that in a case of default, the ownership will get transferred to the lender.
Eligibility Criteria of Loan Against Property:
The documents needed to apply for a LAP are as follows.
- Your residence proof
- Your Identity Proof
- Your latest Bank Statement reflecting your salary for the past 6 months (For salaried individuals)
- Your latest Bank Statement reflecting your income for the past 6 months (For self-employed individuals)
- Certified financial statement for the last 3 years (For self-employed individuals)
- Your Salary Slip for the last 6 months showing all deductions shown
- A Form 16 for the last 2 years
- Copies of all the property documents
How You Can Use the Funds from LAP for Doctors:
Loan Against Property for doctors are slightly different from doctor loans. You can use the funds from LAP for doctors as following expenses:
- to rent or buy property to house your clinic
- to expand your existing practice
- to add a pharmacy in your clinic
- to hire more people
- for marketing purposes
- to buy or upgrade expensive medical equipment
- to buy or upgrade office stationary
- to sponsor your research and as cost for patenting the research
- for higher studies
Advantages of LAP:
LAP has the following advantages:
- You could use the funds from LAP to expand your business, as working capital for your business and as equipment loan.
- Funds from LAP can also be used for education purposes, as wedding expenses and to buy another property.
- You could also use this loan for debt consolidation.
- You can invest the amount for productive purposes like meeting your future goals.
- The processing is faster than other secured loans.
- While the interest rates are higher than other secured loans like home loans, the interest rates are lower than the unsecured loans.
- Since tenure is longer, EMIs tend to be smaller.
Loan against Property with Bajaj Finserv:
With Bajaj Finserv, you could get a LAP of up to Rs.3 crore. The products covered by Bajaj Finserv are a loan against commercial or residential property and loan against the plot.
With this multipurpose loan, you can secure funds for all your plans and simultaneously retain the ownership of the property.