18 June 2018
If you have been thinking of a setting up your own business for a long time but don’t know how to get funded, then a loan against property (LAP) might be a good option for you. In this case, the loan amount is a certain percentage of the property’s market value (40-80 per cent) and it belongs to the secured loan category. You can apply for a LAP for many purposes, one of them being to set up or expand your business.
You can apply for a business loan against a self-occupied or rented residential property that you own. This could be an apartment, an independent house or a plot of land.
Some of the common eligibility criteria will factor in your income, savings, credit score, repayment track record for other loans and the value of the property mortgaged.
The interest rates on a LAP can range from 12 per cent to 15.75 per cent, and the tenure can be as long as 15 years.
The required documents vary depending on whether you are a salaried individual, self-employed professional or business owner. As a business owner, you will need to submit identity and residence proof, certificate as proof of existence of business, business profile, balance sheet, IT returns and bank statements (self and business).
There are many advantages offered by a LAP over a personal loan. A LAP is one of the cheapest retail loans after home loans with a relatively low rate of interest. In a personal loan, the maximum loan eligibility depends on the individual’s income; while in a LAP, it depends on the value of the property (which is usually much higher). The tenure for a LAP is much longer (15 years) than that of a personal loan. A personal loan is an unsecure loan, while a LAP is a secured loan.
Looking for a private finance & loan against property service provider in Mumbai, Pune, Bangalore, India?Dravya Financial is among the leading asset based financing companies in Mumbai, India that can help you identify the right loan for your business needs.