A (LAP) loan against property is a secured loan. Most financial institutions, including home finance companies, offer LAP loans. Anyone who owns a house or a piece of real estate is eligible for a mortgage loan, whether employed or self-employed. The approved loan amount is also significantly more than other loan options.

Since a loan against property is secured by collateral, the cost of borrowing may be cheaper. They are available at a lower interest rate than personal or business loans. A Loan against property is also approved and disbursed more quickly than many other types of loans.

Key Benefits Of LAP

Here are some key benefits of a loan against property:

• It is a secured loan, so it gets approved quickly; the loan against property interest rate is also cheaper than many other loans
• The applicant can continue to live in their home even after the loan has been approved
•  The loan may be used for a variety of purposes, including unexpected medical costs, children’s college education and wedding, and money for starting a business

Factors that influence LAP Tenure  

You need to consider several factors to evaluate the right tenure for a loan against property. Here are a few of them:

Loan Amount

The loan amount will determine how long it will take for you to repay it. If the amount is less, the tenor can also be less. But if the loan amount is on the higher side, it may take longer to repay it. 

However, it may also depend on your paying capacity.

Even if your loan amount is substantial, you can repay it quickly by paying higher EMIs. So, if you want to keep the tenor low, go for a smaller LAP amount. But if you can repay over a long time, you can choose a bigger loan size.  

Age

Another aspect that impacts the tenor of your mortgage loan is the age you are taking the loan. 

If you are in your early 20s or 30s, you can choose a longer-term. It is better to consider a short-term loan if your retirement age is closer. After retiring, there is a chance that your income can halt or decrease. Also, if your income fluctuates, it’s better to pick a longer tenor home loan that will help you lower the loan against property EMIs to an affordable limit. 

The interest rate in a mortgage loan is lower but becomes expensive in the long run due to the extended payback period.

Interest Rate

The loan against property interest rate and the EMI you choose are important factors in determining the tenure of a loan. Choose a shorter term if you want to save money on the interest you will pay to the lender. The early you repay, the less you pay on the interest.

However, if you’re going to make EMIs more manageable, choose a more extended repayment period. When selecting your loan against property, it’s crucial to think about age, earning, and repayment capacity. The interest rate will again be subject to several factors, including the loan amount and tenure you are choosing.

In Conclusion 

We have gone through three important factors which affect loans against property. If you choose a longer tenor, the EMIs will be relatively low. It is always better to weigh the pros and cons of all available options before deciding on the loan tenure. It becomes easier when you know your payback goals. 

Opting for the longest tenor for a loan against property is the best option if you want the monthly instalments to be small. However, you may pay more in interest than a faster repayment plan in this case.