A loan secured by property gives the borrower access to a substantial amount of money. These loans are typically used to start new businesses, finance weddings, or send children for overseas education. Before applying for any loan from a lender, one must be aware of misconceptions. The loan against property private finance companies is aplenty. Before you choose to take out a LAP, you must be fully aware of the myths and the actual truths surrounding these loans. Make sure your choice is supported by facts and real data rather than widespread myths.

Loan Against Property – Facts Against Myths

  • Myth: LAP incurs a higher interest rate.

Fact: Contrary to loans secured by property, personal loans have higher interest rates. The interest rate for LAP is determined by several variables, including the lender you select, the state of the property, and your credit score. Since loans against property are secured, they are less expensive than personal loans. Compared to other personal loans on the market, the repayment period for such loans is also longer. Ensure that you have all the documents required for a loan against property.

  • Myth: You can only use the loan for limited purposes.

Fact: Like any other property loan, a loan against property has no limits or constraints. There are no restrictions on how you may utilise the money. You may use the funds a loan against a property private finance company has given you with whatever you need at low-interest rates.

  • Myth: The property being pledged cannot be used.

Fact: Throughout the loan term, you are free to utilise the property you have used to secure the cash.s Only if you miss a loan payment will the financial institution acquire possession of the property. Bank has all the right to sell your property in this situation. It mainly happens to recoup the costs of lent money.

  • Myth: You should have a high income to apply for LAP.

Fact: You can apply for a loan against property even if your income is moderate. Several lenders have numerous minimum salary requirements for salaried and self-employed borrowers. So, even if your net income is minimal, you can win the lender’s trust by making timely EMI payments and keeping your obligations low.

  • Myth: One can only pledge a residential property.

Fact: To apply for a LAP, you can also pledge a portion of commercial real estate, such as a factory or warehouse. To receive the loan money promptly and without any problem, you must maintain your current paperwork and present genuine proof.

  • Myth: A high CIBIL score will guarantee a LAP.

Fact: Undoubtedly, a loan against a property private finance company can make it easier to give you the loan if you have a credit score above 750, but this does not ensure you will be approved for one. There are more crucial elements that qualify you. A critical factor in this is your ability to make payments, the worth of your property and its legal status.

  • Myth: Ownership of the collateral goes to the lender when you get a LAP.

Fact: If you stay caught up on payments, you keep complete custody of the collateral. This misunderstanding stems from how a gold loan is performed; however, with a loan against property, you must give the lender the property paperwork.

  • Myth: Taking a LAP is risky.

Fact: There is no danger in pledging your assets to receive LAP if you are specific about your credit score and repaying capacity. LAP has several benefits over other loan options, including a longer duration, a reduced interest rate, and a top-up credit capacity. Learn about the documents required for a loan against property to avail of a LAP today.


The loan against property private finance companies offers several benefits that come with the loan. LAP is an excellent alternative if you are shopping for a loan in the market with no limits. You can proceed with your application and pledge your property without worries. In addition, you can modify the loan to meet your financial needs and repayment capabilities. Other than the ones mentioned above, there can be other misconceptions about LAP. You can tell myths from facts by educating yourself and being conscious of the many factors. Speak with a financial professional if you still have questions so they can guide you in making the best decision.

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