Much as a personal loan, the usage of the profits from a loan against property is unlimited. You can use loan against property funds to finance college and wedding for your kids, build a home for yourself, meet medical costs, buy personal or commercial vehicles, even finance your business.
How can I pick from the two?
Time of processing:
When you will apply for personal loan or LAP, the lender will review related documents before the debt is paid out, as a debt against the property is secured by mortgaging the property of the creditors. Furthermore, you would be expected to send income records to determine the potential to repay the loan.
It can take 15 to 30 days for the whole process, so loan against property is not ideal for those looking for fast lending. No guarantees are available for quick personal loans, on the other hand. Lenders must usually review the application based on your monthly income and credit score and will therefore be accepted within 7 days.
Rates of interest:
The loan against property (LAP) interest rate is typically smaller than the actual interest rate on a guaranteed loan. The number can vary from 8.5 to 12 percent. Here, quick personal loan interest rates may go up to 11% to 24%. The key element influencing personal loan interest rates is the credit rating of the applicant. For a real emergency work, you must apply for personal loan but if there is no hurry then think before you apply for personal loan.
Loan against property is ideal for anyone who cannot obtain a decent personal loan arrangement due to low collateral standards.
Your loan balance would rely mainly on your monthly income and your willingness to support your borrower in the case of personal loan. Nevertheless, with LAP, the sum of the loan relies both on the property’s market valuation and on the income. The loan sum in the LAP is usually between 40% and 70% of the valuation of the property and can sum too many crores for the full loan amount. Whereas,the upper limit normally is about Rs.25-30 lakhs for personal loans. In the event that you need a higher disbursement upto 50 crores depending upon your market value of the property, financial advisors suggest taking LAP.
Duration Of Loan:-
The duration of Loan against property is usually higher which may extend till 15years and hence comes up with lower EMI, whereas for that of a personal loan its upto 5years only.
Hence for lesser loan amount , personal loan is an ideal option but for higher loan amount and availability of your property( residential/commercial or industrial) and good income, Loan against property is a better option.
While, as regards to cost, loan term and loan amount, LAP is a better choice than personal loan, whereas if the period needed for the processing remains limited, then Personal loans would be the only alternative for people needing funds shortly within 2-3 days. In the event of your failure in paying your duties, the biggest danger associated with Loan against property is that the creditor could confiscate your house in an event of default of repayments after certain number of warnings. Be sure that your funding potential is self-evaluated before you pick a any product for financing needs.