If unavailability of adequate funds is the only reason that is stopping you from executing an amazing business idea or from expanding your existing business, then it is the right time to approach a lending institution. Especially those who have an idle residential or commercial property, can use that asset to raise the required sum of funds. In this form of borrowing, since the property is kept as a collateral, the loan amount is decided by the lender depending on the value of the property.
In addition, as this loan falls under the category of secured loans, the lenders generally provide a low interest rate and flexible terms and conditions to make it easier for you to make the repayments. Moreover, when you generate finance against property, you do not lose the rights of the ownership as only the transfer of interest takes place. However, you must keep this in mind that if you do not make the repayments, the lender has all the authority to seize the property and sell it. For a better understanding about how this loan can be beneficial for the borrower, here are some advantages that you can take a look at.
Benefits of taking a loan against an idle property
• High loan amount – By mortgaging the property, the borrower can get a loan amount depending on the market value of the property which can go as high as 5 crores. In other words, you get a hassle-free way of generating a large sum of money, that too within a short period of time.
• Alluring rates of interest – Since it is a secured form of loan and the lender does not have to face any risk, you can avail the loan at a low rate of interest. The low interest rates result in lower EMIs, and this further assists in reducing the overall financial burden.
• Longer repayment tenure – Another advantage of raising finance against property is that you are offered a longer tenure period in comparison to what you get in unsecured loans. It can go up to as long as 15 years, depending on the amount you have raised as the loan. With a long tenure, you also get the flexibility to repay the entire loan amount without making a fault in the payment cycle, which in turn can help you improve your credit score.
• No pre-closure charges – The lender does not charge you any additional heavy cost for closing the loan before the decided period. So, if you have the sufficient funds then a prepayment would allow you to quickly get rid of the liability.
Conclusion
With the list of benefits mentioned above, it has become quite clear that taking finance against property allows you to raise a huge amount at a low rate of interest and with a long tenure period. In addition, for the secured loan, the lenders demand a simple list of documents and even offer you the flexibility to use the pre-closure facility at no additional cost. So, if you have a revolutionary business idea that requires you to make a significant investment, then you should definitely consider the option of loan against property.
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