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6 Reasons Why a Loan Against Property Is One of the Safest Options

loan against property

In case of a financial emergency, taking a loan is one of the quickest ways of arranging money and taking care of your needs. However, with so many different types of loans available in the market, borrowers often find it difficult to decide which loan option is the right choice for them. Further, since they are in a hurry to get funds, they opt for the first option available to them, which in most cases is a personal loan. However, financial experts suggest taking a loan against property might be the ideal choice for you if you own an encumbrance-free property. A mortgage loan not only bears low-interest rates but allows one to milk the value of their property while continuing to occupy it. 

Unfortunately, borrowers are often sceptical about considering this option as it involves pledging one’s property as collateral. This article is a must-read for all such aspiring borrowers. In this article, we look at some of the reasons why a loan against property is one of the safest loan options. 

You Are the Owner of Your Property

True it is that in the case of a loan against property, one must pledge their property as collateral or security. However, this does not mean that you cease to be the owner of the property. Your lender will keep your property documents with them. However, the property documents will bear your name, and once you have cleared the payment, your lender will release all the documents.  

You Can Continue to Occupy the Property or Use It as You Like

Here’s another reason why you must throw away any unnecessary tension you may be harbouring in your mind regarding a loan against property. If you are taking a mortgage loan, it does not matter that you have pledged your property as security; you can continue to occupy it as you like. Banks and lenders accept both residential as well as commercial buildings as security. Under mortgage loans, residential property owners can continue to live in the home they occupy and commercial property owners can rent out their property as they did prior to taking the loan.  

You Get Access to a Substantial Fund

Under a mortgage loan, you pledge your property as security. However, you also get access to a substantial fund. Lenders sanction up to Rs.5 crores or even higher as a loan, depending on the value of your property. This fact must bring you some peace. Know that most lenders will sanction anywhere between 60% to 75% of your property value as a loan. Thus, though you pledge your property as security under a loan against property, you do so after getting a decent value for your property. 

You Also Get Competitive Interest Rates

If you need money urgently and want to opt for a non-secured loan, you can take a personal loan. However, know that if you are planning to take a personal loan, your lender will sanction the loan, however at a very high-interest rate. The biggest advantage of a loan against property is that when you opt for a mortgage loan, you get highly competitive interest rates. Lenders charge anywhere between 10% and 24% as interest on personal loans. On the other hand, the loan against property interest rates starts at 8% and does not go beyond 14%. With the right credit and income profile, you can avail of a substantial amount at a very low-interest rate. 

You Can Opt for a Longer Tenor 

If you wish to make your EMIs on your mortgage loan affordable, opt for a longer tenor. Banks and housing finance companies allow borrowers to repay their mortgage loan over a period extending up to 18 to 20 years. Therefore, even if you are pledging your property as collateral, you need not worry. The option of availing of the loan for a tenor extending up to 18 to 20 years will allow you to easily pay off your loan and regain possession of your property papers without worrying too much. 

Loans Against Property Come with Zero End-Use Restrictions

Here’s another reason why a loan against property is a safe option: your mortgage loan comes with zero end-use restrictions. This is not the case with any other loan, except for a personal loan, which has very stringent terms of the agreement. You can use your loan against property for any purpose you like. You can even use it to build another property or to start a business that will fetch you profits regularly. 


It is normal to experience some anxiety while availing of a personal loan. After all, you are pledging your property as collateral and giving a lender some right over it. However, know that a mortgage loan is an entirely safe way of arranging money quickly. All you need to do is borrow only what you can repay, chalk out an error-proof repayment plan, and stick to this plan. Keep aside an emergency fund in case you ever find yourself in a situation when you are unable to pay your EMIs. You can even use a loan against property EMI calculator to plan your finances

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