Choose loan-against-property for higher amount, low rates, flexible end-use
Published by Business Standard
Abhishek Kumar's role: Quoted
Abhishek Kumar explained that only property with a clear title and proper documents qualifies, that farm land is usually not accepted, and that co-owners must consent. He pointed out the lack of tax benefits and advised against such loans for those already carrying heavy debt.
What Abhishek Kumar said
Which properties qualify for a loan against property?
Only a property with a clear title, no legal disputes and documents that satisfy the lender's valuation and paperwork norms is eligible. Agricultural land is generally not accepted, unless the loan itself is for farming and the borrower is a farmer. I suggest checking your title and documents before you apply.
Can I pledge a jointly owned or ancestral property for a loan?
Yes, such properties can be pledged, but every co-owner or legal heir has to give written consent and join the loan as a co-applicant. So before you approach a lender, I would make sure all the owners are on board, since the loan cannot go ahead with only one of them signing.
What are the drawbacks of a loan against property?
A loan against property does not come with any tax benefits. The regular EMIs can also strain your finances, especially if your income is not stable. I would weigh both points before choosing this route, since your property stays pledged until the loan is repaid.
Who should avoid taking a loan against property?
I would advise against it if you already carry a high level of debt, or if losing the property would cause you severe hardship. Because the property is the security, a default puts it at risk, so this loan suits only those who can take on the extra repayment without stretching themselves.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on debt and loans
With lenders turning to loans against property as unsecured lending slows, the article explains how such loans work. It covers eligible properties, loan sizes, interest rates, tenure and loan-to-value limits, common uses such as debt consolidation, the risk of losing the property on default, and how to compare lenders.
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Choose loan-against-property for higher amount, low rates, flexible end-use