Loan Against Property bank will not charge any late payment charges during the moratorium period. However, it must be noted that the interest on your loan will continue to get accrued and you will end up paying more towards interest, thereby further increasing the total cost of your loan. Hence, it is recommended that you opt for loan moratorium only if you are facing a severe financial crunch.
Key Features of Loan Against Property:
1. Collateral: The property used as collateral is crucial in securing the loan. If the borrower defaults on the loan, the lender has the right to seize the property to recover the outstanding amount. This collateral reduces the lender's risk, typically resulting in lower interest rates compared to unsecured loans.
2. Loan Amount: The amount a borrower can access usually depends on the property's value and the lender’s policies. Generally, lenders offer loans ranging from 40% to 70% of the property's market value, though this can vary.
3. Interest Rates and Repayment Terms: LAPs generally feature lower interest rates due to the secured nature of the loan. Repayment terms can be flexible, ranging from a few years to several decades, depending on the loan agreement and borrower’s preference.
4. Uses of the Loan: Funds from a LAP can be used for a variety of purposes, including business expansion, education, medical expenses, or debt consolidation. This flexibility makes LAPs an attractive option for borrowers needing significant capital.
5. Processing Time: While LAPs involve property valuation and legal checks, the processing time is typically quicker compared to unsecured loans due to the security provided by the collateral.