Finance

Questions You Should Ask Yourself before Applying for a LAP

Loan Against Property

As the name rightly suggests, a loan against property or LAP is a mortgage loan which is pledged against the property of the borrower. LAP can be availed against the residential as well as the commercial property. The other name of LAP is a mortgage loan, and it assists in meeting the financial requirement. Loan against property is of great significance as it helps one in unpredictable circumstances, assists in starting a business, expanding the business and helps in availing new technologies. An individual can take a loan at a certain percentage of their property’s market value without having any limitation on the use of the property. However, the decision to take a loan against the property must not be done in haste and should always be based on proper analysis. In order to decide whether to take a loan against property, an individual must ask these questions to himself:

1. Can my monthly income afford the loan?

The decision to take a loan against the property must not be based on mere gut instincts; rather individual should take a note of all the minute things because a wrong decision may lead to terrible financial consequences. One of such minute analysis is whether one’s income can afford the loan or not. Individuals must compute their salary from all the sources and should minus the expenses and check if the income is enough to afford a loan. If yes, then he should proceed and if no, there is a need to rethink about taking a loan.

2. What is the value of the property?

Loan against property is provided against the property of an individual. Property can be a residential property or a commercial property. Individual must ascertain the value of the property in the market, which depends on different factors like a market price, location, type etc. It will help him to know the actual loan amount, which can be availed against the property. He should be prepared with all the relevant documents related to the property.

3. History of the Property

Individuals should not only know the current value of the property, but he should be well aware of the past of the property. He should know the person from whom he purchased the property and other such details must be the tip. Banks and the financial institution may ask these question and failing to answer these questions may deter one’s chances of getting a loan approved.

4. Research

Taking any decision without a proper thought process and analysis most often result in terrible repercussions. Individuals must not randomly opt any for a loan against property instead they should check all the available options with different banks and financial institutions and should compare the factors like rate of interests, processing cost and other important factors. And then should select the one which fits their requirement.

5. Be Smart and Cautious

Individuals should always be wary of all the kinds of frauds, and they should not follow any unverified source. They should be careful of the attractive offers as they someone rightly said, ‘all that glitters is not gold’. Being careful and smart helps one to be away from becoming a prey of fraud.