Property Loan: Prudent Solution for Overcoming Financial Crisis

Business

Did you know that loan against property can play an essential role in helping overcome financial contingencies? Read on to learn more.

Facing a severe cash-crunch and in urgent need of capital? You are not alone! Most of us encounter financial distress at some point in life. Explore the option of loan against property (LAP). It is a viable solution to manage a liquidity crisis when in dire straits.

What is a Loan against Property?

Basically, it is a loan acquired against the mortgage of property. The money sanctioned is generally in the range of 40%-60% of its net market value. What’s more, the interest rate is reasonable, repayment options flexible and the loan tenure can stretch till nearly 15 years. Further, the pay-out comes without restrictions and can be used for any purpose without specifying a reason.

Let’s delve into five ways LAP can help dig you out from financial troubles.

  1. Paying Off Credit-Card Debt: Thanks to exorbitant interest rates, credit card bills can spiral out of control and dent your financial health considerably. Failure to pay up within the stipulated time results in penalties and accumulation of debt for years. It’s thus crucial to settle this debt as quickly as possible. Using LAP with a potentially lower interest rate and manageable EMI’s to consolidate payments or clear all dues in a single instalment is a smart move that can help save money.
  2. Pursuing Higher Education: Higher education within the country or overseas is a significant expense, be it for yourself or your kids. While taking an education loan is an option that can be explored it comes with own set of hassles. In such a scenario, a LAP can literally be Godsend especially if you are feeling the financial pinch. It can be a valuable source of funding for pursuing higher studies.
  3. Meeting a Medical Emergency: An unexpected medical emergency can be catastrophic. It can drain you both emotionally and financially.  Despite medical insurance, people sometimes find it challenging to meet the high cost of treatment. LAP can come to your rescue. Since the loan tenure is long and the interest rate relatively reasonable, it ensures that all your savings are not wiped out during the medical crisis.
  4. Expanding your Business: Expansion or restructuring of a business is a costly affair. Everything from buying equipment to hiring resources, meeting operational costs, marketing and advertising requires a substantial amount of money. That’s where LAP comes into the picture. It is the perfect source to cover the necessary expenses to fuel business growth.
  5. Cover Marriage Expenses: Most parents aspire to give their children a wedding day that is a memorable one. Unfortunately, they often do not have the finances to make it happen. LAP can solve this problem. It can help take care of the big expenditure with ease without throwing the budget in disarray.

As you can see property loan can certainly bail you out from a financial pickle. However, bear in mind that it is a secured loan and not risk-free. In the event of default, you can end up losing the asset as the lender is entitled to auction or take possession of the mortgaged property.

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