Owning a business is a matter of pride and you can turn all your aspirations into a reality with the right lenders at your side. You can achieve all the business goals with adequate funds on hand and if you own a residential or commercial property, you can apply for finance against property.
The secured loan is designed to help you meet the business goals and will make it easier for you to grow the business. You can use any property to get access to funds. It can be in use, rented, or leased out. The biggest advantage of the loan is that the funds can be used for any purpose in the business. You can use it to expand production, enter a new market, buy machinery or invest in research and development.
The loan is one of the preferred forms of borrowing and it has a high amount. When it comes to a secured loan, the risk is low because your asset is hypothecated with the lender. At the time of loan application, you hypothecate the asset with the lender and get access to funds. After the entire loan amount has been repaid, the lender will transfer it back to you. However, if you default in the repayment, you could end up losing the asset. The lenders have the right to auction the property to recover outstanding dues. They will give a notice about the same but if you do not make the payment on time, they will use the property and recover the dues.
You can be a sole proprietor, partnership, private company, or public company to apply for the loan. The loan application procedure is simple and hassle-free. You can make an online application and submit the documents. You will have to provide identity documents, KYC of the partner, address proof, business registration documents, bank statements, ITR, the title deed of the property and income statement, and balance sheet.
After the submission of the application, the lender will hire a market valuer to estimate the market value of the property. If you already have the valuation report, you can present it to the lender. The loan amount will be based on the value of the property and you need to keep in mind that the entire value of the property will not be the loan amount. Most lenders only offer 60% to 70% of the amount as loans. Hence, it helps to have an idea about the market value of the property you own. You must also check the credit score before applying. A high credit score can make a significant difference to the interest rate and terms of the loan.
Once everything is in place, the loan will be processed and approved in no time. You will receive the funds in your account and you can use them the way you want to. Prepare a repayment schedule to ensure timely payment of dues. It will reduce the burden on your working capital and will allow you to plan the budget accordingly.
Before you sign on the loan documents, understand the terms and conditions of repayment. If there are co-owners of the property, they will become co-applicants to the loan. Whenever you apply for finance against property, you need to use the EMI calculator. It is available for free and is easy to use. The calculator only requires you to provide the loan amount and tenure. It allows you to change the inputs till you reach an optimal amount. It is a very useful tool that gives an insight into the amount of EMI you will have to pay. It also provides details about the interest element in the EMI amount. You need to consider the cash inflow and outflow before agreeing on an EMI amount.
Finance against property can help you in multiple ways. You have invested a significant amount in the property and you can use it to raise funds for the business. It is the best way to expand your business and take it to new heights. One of the most common and easiest forms of borrowing, the loan comes with a high amount, low interest, and flexible repayment tenure.
