Quick Inputs on Using a Loan Against Property for Small Venture Investments
Have you been planning to start a small business for long? Try using a loan against property as the initial capital. Read on for more details!
Almost everyone wants to start their own business in this rapidly growing economy. But the first thought that crosses a potential entrepreneurs mind is regarding the lack of initial capital. This is the primary reason why most people back out from starting a small venture.
The answer to this ever arising problem is taking a loan against property for business startup. Every financing organisation that I know of offers a similar service to its clients. That is why it is straightforward to find a loan against property in India. Are you in a desperate need for some urgent funds to cover many needs such as upcoming wedding expenses, hospitalization costs and more?
You need to relax as if you have a property or plot, you can grab a low Loan Against Property Interest Rates and avail up to 60-75% value of your property/land.
Let’s help you understand the loan against property benefits so that you may know how good it is a financial product to cover your almost all financial needs super quick.
If you have been planning a venture yourself, then here are the advantages and disadvantages of using a loan against property for business startup.
What is a Loan Against Plot/Property?
As the name suggests, a loan against plot is a loan which a lender offers to a borrower against his/her property wherein the said property is kept as the collateral. Based on how you old are your property, you can get the market value of your home as the total amount from a lender.
Since your land or property is the collateral or security in this regard, the lender approves the loan without hassles and most importantly, at a lower rate of interest.
Loan Against Property Eligibility at a Glance
You can qualify for the loan against plot if you have the required standard loan against property eligibility such as:
> The applicant should be under an age bracket of 33-58 years
> You should be a working individual either at a private, public or MNC company
> A loan against property facility is available presently in major Indian cities and you ought to be residing in them to avail of the facility
> Contact your respective lender to know exact eligibility criteria
Loan Against Property Documents that you need to Furnish
Along with the loan against property eligibility, you will also need to furnish some basic documents online to complete your loan application such as:
- KYC documents
- Latest Salary Slips
- Last 3 months’ salaried bank account statements
- Address and identity proofs
- Property documents to be mortgaged
- Income Tax Returns (ITR)
Benefits of Loan Against Property
Here are some pros of availing a loan against property that makes it a winning proposition for you:
- Let you Grab Ample Amount
When you are able to grab up to 75% value of your property as a loan, you can easily get a higher amount to cover upcoming expenses with élan. Taking one loan is enough to meet different needs at a time and you won’t need to apply for different loans.
- Lower Interest Rates
Compared to another type of loans such as personal loans and more, the loan against property comes with a lower interest rate as your property is kept as collateral. Leading online lenders can also help you with a wider tenor to help you enjoy better repayment so that it does not affect your monthly finances.
- Flexible Tenor
A loan against property gives you flexible tenor as short as 2 years and as long as up to 20 years as per your eligibility, financial status and age. You can pick a short tenor if you want to repay it off quickly and earning higher salaries. On the other hand, if you want to make things affordable, you can opt for a longer tenor and spread the cost into wider tenors.
Advantages of Loan Against Property for Business Startup
1. Lower Interest Rates
Interest Rates on loan against property is generally lower than that of personal finance. It also means that the money you will save on interest can be put to use for the actual business. That is why most entrepreneurs prefer to take a loan against property for business startup and funding.
2. Overdraft Facility
The second most apparent advantage of using a loan against property for business startup is the overdraft facility. This type of transaction provides business owners with an opportunity to take a top-up or overdraft on their existing loan amount. It can prove to be a critical factor especially when you are in business.
3. Affordable EMIs
Since a general loan against property for business startup is taken for a long duration, one has the opportunity to enjoy a more affordable EMI system. The loan tenor can be extended for up to 15 years if desired. It gives the borrower enough time to repay the amount strategically without having to compromise the status of the business.
4. Various Financial Needs
Lastly, a business has multiple types of financial needs which cannot be forecasted. That is why using a Loan Against Property for Business Startup is highly preferred all around the country. It gives you the freedom to use the funds without any restrictions. It also takes away a major concern for small venture entrepreneurs.
Disadvantages of Loan Against Property for Business Startup
1. Two Valuation Reports
Every financial service has a few drawbacks, and the same goes for taking a loan against property for business startup. In most cases, a property owner would try to settle for the maximum bid amount. However, when financial organisations work to evaluate your property, they opt for the lower amount. That is why most of the firms create two valuation reports.
2. Property on Stake
Another negative of using a loan against property for business startup is of putting your assets on the stake. Among all the loan against property documents required, you also need to submit the original registration deed of the asset. In other words, the papers will stay with the financing organisation till the time you repay your loan in full.
3. Multiple Loan Amount Factors
Individuals who take a loan against property for business startup often believe that the real value of the asset is the only factor in narrowing down the credit amount. But this is far from being true. Every financing organisation has their benchmarks and guidelines when it comes to deciding the actual loan against property eligibility amount.