The Indian lending market is diverse in terms of the availability of different credit products that cater to a large borrower base with unique fund requirements. A loan against property is one of those credits that dominates this market due to its borrower-friendly features like lucrative interest rates, zero end-use restrictions, and likes.
Property owners often resort to this advance to mitigate big-ticket expenses, ensuring minimal borrowing costs. However, before collateralizing a high-stake property, they should have a clear idea about the past and coming years’ LAP market trends.
LAP market trends in past years (2016 – 2020)
Property prices in India are dynamic, owning to volatile market conditions. Since the property price is the primary factor that decides the loan against the property principal, this lending sector witnessed several turbulences.
For instance, in 2018, the loan against property was one of the fastest-growing credit segments with a 33% y-o-y growth. The expected growth of this segment was almost 22% annually for the next four years, as stated by CRISIL. However, due to major economic turmoil, in 2019, LAP delinquency in 90 days repayment overdue increased to 1.77% in January 2019.
However, since FY20, the LAP market is recovering at a steady pace. If you are planning to opt for a loan against property in the coming years, it is crucial to know the LAP market forecasting.
Loan against property market forecasting (2021 – 2026)
India’s loan against property market is expected to grow at 14% CAGR in value to reach USD857.87billion by FY26. However, in 2020, the LAP inquiry volume witnessed a negative growth of 7.6% till November, the outstanding balance reduced to 8.8% y-o-y till August 2020.
In the coming years, the LAP market is likely to maintain a steady pace, making it the right time to apply for a loan against property. To make the most of this fund, individuals thus need to have an overview of the credit product.
Know more about loans against property
Besides studying the LAP market condition, it is also necessary to know its key features and benefits.
- Substantial sum
Depending on the current property valuation and the LTV, a loan against property offers substantial funds. Therefore, it proves to be sufficient for most high-value credit requirements. Nonetheless, it is advised to borrow the amount you exactly need and can repay comfortably. For better convenience, you can utilize a LAP EMI calculator and check the monthly instalments.
- Competitive interest rates
Modest loan against property interest rate is the primary reason for the popularity of this secured credit. Since this loan is backed with collateral, the lending risk is lower. It enables lenders to offer competitive rates alongside better terms.
- Longer tenor
Besides affordable LAP interest rates, this credit also accompanies a longer tenor of up to 20 years. However, you should know how to determine the ideal tenor of your loan against property. It will help you calculate EMI payable and ensure on-time payment.
- Simple eligibility
Being a secured credit, the mortgage loan interest rates are not only reasonable, but the eligibility criteria are also easy-to-meet. For example, the applicant needs to have a steady income source, must possess a high-value asset, and likes.
Selected HFCs offer substantial loan against property at reasonable interest rates against simple eligibility.
They also extend pre-approved offers that make loan processing hassle-free and quick. Such offers are available on various credit products like home loans, LAP, etc. Check your pre-approved offer online by entering your name and contact number.
- Easy balance transfer facility
Individuals can also maximize the savings on interest payment by opting for a loan against property balance transfer. It allows existing borrowers to transfer their outstanding dues to another lender offering better rates and service terms.
- Zero additional charges
Top financiers also do not impose additional part-prepayment, foreclosure charges, etc. However, almost all lending institutions charge certain processing fees that borrowers need to pay during loan disbursal.
Hence, it is clear that a loan against property has performed well in past years and is expected to maintain this legacy irrespective of the market condition. Hence, the borrowers can consider this credit as a potent borrowing option for any financial requirement.