There are enormous myths pertaining to loan against property that is often discussed and misunderstood and as per the consequences of these myths, various people having huge property also gets hesitated in getting a loan against property, and they have to face the refusal of loan, especially in the case of personal loan. Whereas once you get an explicit idea pertaining to the loan, it becomes easy to avail of a loan and accomplish your multiple works. Therefore, here we are discussing some common myths that affect the notions of people and they can make their ideas better and lucid.
The loan amount can be equal to the property
The general myth in the case of a loan against property is that the loan amount can be chosen that is equal to the property. But that is not correct at all. The loan amount in this case generally equals up to sixty to ninety per cent of the property, In the case of a fixed deposit or another liquid collateral, it is more and up to ninety per cent of the property.
Collateral would not be used.
A general myth is that there will be some losses of collateral and it would not be used after getting the loan against them. But the fact is different and after finishing or closing the loan, the property can be used for selling, or used as collateral again. Therefore, you must know that the property used for the collateral is just to show your credibility so that the lender can be ensured about the repayment. In case of any default, they can confiscate the property and that is the problem with the loan against property, but it is all about the punctuality that the borrower must follow and repay the loan amount as per the tenure.
The interest rate will be higher
Interest rate is the common factor in all types of loan where all the loans i.e., loan based on salary or loan based on business depends on the rate of interest. A common myth is there that the rate of interest would be higher, but the scenario is completely different, and the rate of interest is slightly lower in this case. Therefore, you must be assured that applying for such kind of loan helps you get the loan easily at a comfortable rate of interest.
The loan is provided based on salary.
The personal loan is always approved on the basis of the salary or the ITR, especially in the case of self-employed. The salaried person is preferred for the loan. Apart from these, the loan against property is approved for all special those having a property to show and present as collateral. Therefore, this myth is contrary to the fact that a person having no fixed salary or job can also apply for a loan.
Credit score matters
Although an ideal credit score is necessarily required for getting a loan, especially in the case of a personal loan, it can be easy to borrow the loan against property, in this situation, the lender does not emphasize the credit score because they already have collateral to be assured about the customers. Therefore, credit score may not matter for this kind of loan and it’s a myth that you need to have a good credit score.
Conclusion
Getting a brief about the personal, especially the loan against property various concealed facts gets revealed and you can easily understand that, once you apply for a loan against collateral, you do not have to wait longer for the approval and disbursal. After verifying your documents, and property, the loan amount in a proportion which is set by the lender is approved and disbursed in your account directly.