A loan against property is the amount that you borrow by keeping any kind of property as collateral. It can be residential as well as commercial property. It’s an extremely secured loan because you are keeping your property as a guarantee. You can borrow this loan for various purposes, some of which have been mentioned later in this article. Here are a few things related to a LAP that you need to know.
Amount of loan you can borrow
This largely depends on the current value of your property. You can avail a loan amount or small business loan Singapore equivalent to 70% of the property’s value. Apart from the property’s value, the bank also considers your net income, living standard, other loans taken, savings, and the stability of your job or business.
Documents to be produced while borrowing LAP
Clients need to produce their identity proof, income proof, address proof, educational qualification, age, and documents concerning the ownership of the property. In some cases, customers are also required to show the bank statements for the last 6 months.
Rate of interest
Though various loan providers offer LAP at various rates, it usually ranges between 12 to 16%. The rate of interest determines your total repayment amount.
Tenure of repayment
This again varies from one provider to the other. The tenure can be extended to 15 years. However, it’s advised not to choose a long term for repayment because the rate of interest is higher in this case. If you choose a short period of repayment, the ROI would be less.
Purpose of borrowing LAP
A loan against property is the ideal way to arrange for money securely. If you are running short of money but have to meet certain financial expenses, opting for s loan against property would be a judicious decision. You can borrow a LAP on any of the following occasions:
- Advanced studies
- Establishing an enterprise
- Buying a piece of land
- For Medical treatments
- Foreign tour
Considering all the above-mentioned facts, it can be concluded that LAP offers a good way of raising money for catering to one’s financial needs. However, you must be careful of the fact that the inability to repay the loan on time would lead the bank to confiscate your property. So, you must calculate the EMI that you can afford to pay and get insurance coverage done if possible.