The Good and The Bad of Property Loan

Whether you have an idea that you want to materialize or simply want to buy something you have your heart set on, a loan is probably your safest bet. There are various types of loans you can choose to avail, one of which is a property Loan. In this article, you will read about the pros and cons of taking property loan.

What is a Loan against Property?

This loan is where you pledge your property as collateral to avail the services of a financier. It acts as a security measure for institutions because it means if you default on repaying your loan, the bank or NBFC can take your property. Although you might be wary about using your property as collateral, this loan is considered the most ideal if the amount you are looking to borrow runs into 6-digit figures. The property loan interest rates are usually lower than that of other loans. Like with any other loan, you’re EMI payments can be calculated using a specific EMI calculator. Just like how personal and property loan advantages factor into your borrowing decisions, the advantages of taking property loan also are vital.

The Upside to Property Loan

  • Big Loan Amount Means Longer Tenure
    the larger the loan, the longer you have to pay it off. Since the duration of the repayment period is extended, the EMI you pay on the loan is not as high as other loans. The duration also means that the interest calculated on the principal is lower than other loan rates.
  • The Type of Property is Irrelevant
    whether you own a residential property or a commercial one; you are still eligible to get a loan approved. So make sure you do your research before committing yourself to a particular product.
  • They are Classified as Secured Loans
    since you are putting up property to act as security for the loan, it becomes a secured loan. The reason this is an added bonus is because secured loans help build your credit.

The Downside of a Property Loan.

  • You Can’t Specify How Much
    When you apply for a property loan, you can’t ask for a specific amount. Based on the evaluation of your property, the lender would estimate the maximum loan amount that can be lent to you.

    Stricter Eligibility Criteria

    The criteria you have to meet in order to get an approval is a little more extensive than that of other loans. The dominant factor that NBFCs look for is the income of the applicant.

  • Financiers Tend to Value Property Lower Than Market Rate
    since the collateral evaluation is carried out by the lender, the final figure quoted is often lower than the actual market value of the property.
    When you look into getting a property loan, make sure you do the research before making a decision regarding where and when. Some companies let you apply online for property loans and property loan.


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