When financial needs arise, many people consider a Loan Against Property (LAP) as a viable option. However, misconceptions often prevent individuals from utilizing this financial tool effectively. In this blog, we’ll debunk common myths surrounding LAP, providing clarity to help you make informed decisions.
At Divadhvik, we aim to empower individuals with financial knowledge, whether through the best equity mutual funds to invest in or guidance from an experienced mutual fund advisor. Let’s break down the myths and uncover the facts about LAP.
Myth 1: You Lose Ownership of the Property
One of the most common myths is that opting for a Loan Against Property means giving up ownership of the property.
Fact:
When you take an LAP, you retain ownership of the property. The lender holds it as collateral, and once the loan is repaid, the lien on the property is released. During the tenure, you can continue to live in, rent out, or use the property as you wish.
Myth 2: LAP is Only for Business Owners
Many believe that LAP is a financing option strictly for business purposes.
Fact:
LAP is a versatile loan product that can be used for various needs, such as:
- Funding your child’s education.
- Covering medical emergencies.
- Renovating your property.
- Consolidating existing debt.
At Divadhvik, we help individuals explore diverse financial solutions, whether it’s investing in the best equity mutual funds or utilizing LAP to meet their unique requirements.
Myth 3: Only Residential Properties Are Eligible
It’s often assumed that only residential properties qualify for LAP.
Fact:
Both residential and commercial properties are eligible for Loan Against Property. The eligibility largely depends on the lender’s terms and conditions. Some lenders also accept plots of land as collateral.
Myth 4: Loan Amount is Equal to the Property’s Full Value
A common misconception is that the loan amount sanctioned equals the full market value of the property.
Fact:
Typically, lenders offer 50-70% of the property’s current market value as the loan amount. Factors such as your credit score, repayment capacity, and the lender’s evaluation criteria also play a role.
Myth 5: Interest Rates on LAP Are Too High
High-interest rates are often cited as a reason to avoid taking a Loan Against Property.
Fact:
LAP generally has lower interest rates compared to unsecured loans like personal loans. Since it’s a secured loan, the interest rates are competitive, making it a cost-effective option for those seeking significant funding.
Myth 6: LAP Application Process is Complicated
Many believe that applying for LAP is a tedious and time-consuming process.
Fact:
With proper documentation, the process is straightforward. Reputed lenders offer quick approvals and disbursements, ensuring minimal hassle. At Divadhvik, we prioritize guiding clients through every step, simplifying the experience.
Myth 7: LAP is Riskier Than Other Loans
The idea of using your property as collateral makes some people think LAP is too risky.
Fact:
While any loan involves a degree of risk, as long as you make timely repayments, there’s no threat of losing your property. LAP offers the advantage of lower EMIs due to longer repayment tenures, making it easier to manage.
Conclusion
A Loan Against Property is a powerful financial tool that, when used wisely, can help you achieve your goals without selling your assets. By debunking these myths, we hope you now have a clearer understanding of LAP.
At Divadhvik, we’re here to assist you with personalized financial solutions, whether you’re exploring LAP, the best equity mutual funds to invest in, or need guidance from a trusted mutual fund advisor.
Take charge of your financial journey with confidence! Connect with us today to learn more.
