While Borrowing, Count on the Cheapest Option
The immovable property market in India has undergone a major transformation during last decade. The Indian realty market has aligned itself with the global standards. Not only the the residential sector but also the commercial and retail sectors have also grown at a healthy rate.
Keeping pace with this positive change in the realty market, the mindset of the Indian customer, as far as taking a loan is concerned, has taken a leap. Unlike the cautious or even negative approach on loans a few years ago, today, the consumer has a far more positive and open. He prefers taking loans to other options such as borrowing from friends and relatives. Availing a loan to meet the requirements is about being self-reliant, and this gives him a sense of self-respect.
The loan against property segment of the Indian loan market has become extremely competitive. The major players of this segment has redefined their terms and conditions. The general customer with an increased financial literacy is much more informed about the options available to him. Apart from competitive rates and best service, value-added services like insurance facility, loan holiday and customized features of this loan have attracted a major chunk of borrowers. With increased competition, the biggest challenge before banks is in offering more sophisticated and customized loan against property to suit the customer needs. Gone are the days of Vanilla loan structure. Consumer research also indicates that the customers are seeking more than just a loan these days and want utmost convenience in the entire borrowing process.
The banks and other lending institutions feel that the positive growth trend in the loan against property sector will continue due to the increased number of homeowners. Apart from this the financial literacy among the borrowers is also increasing. They are aware that unsecured and personal loans cost highly. While personal loans charge near about 18%, the loan against property are available at nearly 12% per annum. Compared to the unsecured loans, these loans are easily available. The lender does not hesitate to offer a higher loan amount as the borrower pledges security against the loan amount. The unsecured types put a sealing on the loan amount. But in case of loan against property, the borrower can take up to 40% of the market value of the security as the loan amount. Higher the value of the pledged security, higher is the loan amount and vice-versa.
Loan against property can offer the borrower a loan amount up to Rs. 3 crore against depending upon the nature of the property. Generally, the loans sanctioned against commercial property fetch a higher amount as the value of the security is high. These loans enable the borrower to perform multiple financial activities like repaying high cost loans, funding business plans, sponsoring children's education or marriage.
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