Business Standard

Avoid over-leveraging with loan against property: All you need to know

While interest rates are more attractive than in a personal loan, don't overlook the risk of losing your property if you default on your EMIs

home loan transfer
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home loan transfer

Sanjay Kumar Singh
  • Loans against property (LAP) are popular among businessmen who prefer them over personal loans to meet their working capital needs as the interest rates are lower 
     
  • But if the business falters, or the borrower is unable to rent out the property and earn rental income from it, he could face problems in repaying the loan
     
  • In case of a default, the lender could repossess the property. Therein lies the main risk of LAP
     
  • Only take this loan for productive purposes   
     
  • Have backups in place - assets like gold, ancestral property, shares, etc - that can be sold in case

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