Different Types of Loans Available in India Against Property

Loans against property are a type of secured loan under which a borrower avails of a loan by pledging a residential or commercial property as collateral. Types of Loans against property are categorised into various sub-categorised based on the type of collateral, the borrower and the use to which money is being put. 

Based on the Type of Collateral

Loan Against a Commercial or Residential Property 

A loan against commercial or residential property is a type of secured loan under which a borrower avails of a loan against a residential or commercial property. 

Lease Rental Discounting

Under this type of loan, a borrower avails of a loan against a property that is delivering rental income.  

Based on the Borrower

Based on the borrower, loans against property are divided into the following categories. 

Loans Against Property for Salaried Individuals 

Under this category, lenders sanction loans to salaried individuals. Other than being owners of the property they plan to pledge as collateral, salaried individuals must also have a good credit score and must be able to show at least three years of work experience and a stable income. 

Loans Against Property for Self-Employed Individuals 

Under this category, lenders sanction loans to self-employed individuals. To be able to avail of a loan under this category, a borrower must be able to show at least 5 years of business vintage and profitability. They must also have an excellent credit score and must be the rightful owners of the collateral.   

Loan Against Property for Doctors and Chartered Accountants

Both doctors and chartered accountants need money to expand their business. For instance, doctors often find themselves needing money for buying new equipment and setting up a new practice. Similarly, chartered accountants often find themselves needing money for setting up a new firm or hiring new employees. These needs can be taken care of by availing of a loan against property designed to cater to the needs of doctors and chartered accountants. 

Based on Usage

Based on how the money is used, loans against property are further categorised into the following categories. 

Loans Against Property for Wedding

If a borrower needs money to take care of wedding expenses, they can avail of a loan against property for wedding. 

Loans Against Property for Education

These days, education has become supremely expensive and parents often find themselves feeling the need to avail of a loan to facilitate their child’s education. If your child wants to pursue and education abroad or an expensive degree and an education loan is proving insufficient, you can avail of a loan against property and use the money to put your child through college. 

Loan Against Property for Home Renovation 

After a few years of living in a home, home loan borrowers realize the need for remodelling and refurbishments. Home loans cannot be used for remodelling a house and personal loans draw a very high rate of interest. Thus, to take care of home renovations, borrowers can consider availing of a loan against property. 

Loans Against Property for Debt Consolidation 

When borrowers have too many loan EMIs and credit card due dates to take care of, it becomes difficult for borrowers to keep track of all the different due dates. This often leads to the borrower missing due dates and paying late fees later. Thus, in this case, borrowers are advised to go for debt consolidation. Debt consolidation is the process of availing of one loan to take care of all the other loans. When borrowers opt for debt consolidation, they only have one loan EMI to take care of and this makes loan repayment easy.