India's largest home financier HDFC has reintroduced its loans against property (LAP) scheme to boost borrowings for personal consumption. The loan product essentially helps customers leverage their equity in their property without having to dispose it off.
HDFC's LAP is available for all resident Indian property ownersto avail of loans against the current estimated market value of the property.
Existing home loan customers of HDFC can avail upto 60 per cent of the market value including the current loan outstanding, while customers who do not already have an outstanding loan with the financier can borrow upto 50 per cent of the market value of the property. In both cases, the loan amount is subject to their loan eligibility.
HDFC's LAP is available at interest rates of 11.25 per annum for loans up to Rs1 crore and 11.00 per centfor loans above Rs1 crore for loan terms up to 15 years for both residential properties and non-residential properties.
In a statement, HDFC managing director Renu Sud Karnad said, "One may not always be able to plan for a lot of things in life as both, opportunities and emergencies can be unexpected and could be equally important to be ignored. HDFC's loan against p roperty helps customers take advantage of such opportunities or attend to emergencies by making available one of the important ingredients required in both cases, which is funds.
"If you own a property, it can probably serve as the best possible avenue to generate a decent amount of funds within a short period of time while you continue to comfortably live in the house. Availing a personal loan from a lending institution may also be an option.
"However the advantage of LAP is that not only is the interest rate lower than a personal loan, but the tenure of the loan is also much longer. This enables a person to take a larger loan as compared to a personal loan where the period is very short which has a huge impact on the cash flow and thus the repaying capacity".