Loan against property is an all purpose loan. A loan can be taken for any purpose in the time of financial emergency. There is personal loan but it is tagged with a high interest rate along with short loan repayment tenure. Therefore many people are not able to take personal loan. If you own a house you can take loan against and it turns out to be cheaper than a personal loan. The reason behind this is the lender has the mortgaged property as security with it therefore there is no tension of defaulter of loan amount. While in the personal loan there are no such security norms.
The loan given against property has a long repayment period, generally 10 years. The loan can be taken for any financial requirement whether it is for funding of the existing business in case of debt consolidation, any emergency, education, marriage or other constraints. In case of personal loan you have to specify the reason for taking loan but in this loan there is no such rule but if your loan amount is Rest 25.00 laces and above then you have to specify the purpose of the loan.
For instance the country’s largest public sector bank SBI has a clause that the loan can be taken for any purpose what so ever. In case the amount of loan is Rest 25.00 laces and above then purpose of loan will have to be specified along with an undertaking that loan will not be used for any provisional purpose whatever including speculation on real estate and equity shares.
Some of the banks give the loan against both types of properties whether residential or commercial but some of them give loan against only the residential property. The loan amount can range from Rest 10 lakes to Rs 3 cores, though the amount varies from lender to lender.
Some of the banks offer special schemes along with this loan like free personal accident insurance cover.
To get this loan you must be above 21 years of age and the maximum is 60 years, whether salaried of self-employed. For instance the largest public sector bank the State Bank of India has the following eligibility criteria – an individual who is: an employee or a professional, self-employed or an income tax assessed or engaged in agricultural and allied activities. Bank has fixed the maximum age limit to 60 years. » Read more: All Purpose Loan – Loan Against Property