A significant financial investment and choice are essential to launch a business. If you are unable to raise enough money, this may cause you to rethink your choice. There are many ways to borrow money, including overdraft protection, LAP, project loans, home loans, and mortgages.
Lending a loan against property without income proof(LAP) is one of the common ways to get money. A LAP loan is a loan that is backed by property or real estate. In this case, the borrower gives the lender the deed to their home in exchange for a loan amount with a specified interest rate that will be paid back over a set period of time. A mortgage is when the title to a property is transferred as security for a loan.
Using this property loan to launch your business is just one of many possibilities. It is also widely employed for corporate expansion, promotion, and development. A loan against property may be used for both residential and business assets.
Advantages of LAP loan
The following are some perks of getting a loan against property to start a business:
extremely low interest rates
As was said earlier, a loan secured by property is a secured loan. Because of this, the interest rates for loans secured by property are far lower than those for other types of loans, such personal loans. Your EMIs are reduced as a result of this feature. You can handle your company’s finances rather easily and without using up any of your savings.
Longer time of repayment
A loan for real estate typically has a lengthy repayment period. It could range between 1 and 15 years, depending on the lender you select. A lengthier loan payback term is very beneficial when starting a new business because it takes time for your company to establish. Additionally, because EMIs are relatively lower, the strain of repayment is lessened.
xtensive qualifications needed
There are a few easy prerequisites you must meet in order to be eligible for LAP loan. Professionals and non-professionals who are self-employed can both apply for the loan. When the loan expires, you must be at least 21 years old and no older than 65. Moreover, the lender may ask for qualifying paperwork and evidence of your monthly income.
The greatest plus of taking out a loan against your property to start your new business is the ability to utilise the potential of your asset. Despite being used as collateral for your loan, you still own and use the property or land.
extensive qualifications needed
LAP loan Eligibility Requirements
- The home or business property must be yours legally, without an outstanding mortgage or other legal obligations attached.
- People who are paid a salary should be between the ages of 21 and 60.
- Self-employed people should be between the ages of 25 and 65.
- Small to medium-sized businesses (SME) should be at least two years old.
- It’s preferable to have a credit score of at least 700.
A loan of up to 60% of the value of a residential property is allowable. For commercial properties, this rises to 70% of the total property value. The maximum loan amount for a residential property is Rs. 60,00,000 and the maximum for a commercial property is Rs. 70,00,000, for instance, if your property is valued Rs.
A Final Word
With a property mortgage loan, you may effectively meet your business needs. Be careful to submit the necessary papers and be informed of the terms and restrictions. Using an LAP loan EMI calculator to compare loans against property rates will give you a better sense of how well this type of loan might work for you.