Debt Consolidation: The LAP Way
The incredible growth of the Indian banking and financial services sector, in recent years, has not only made finance much more accessible, it has also brought in a wide range of financial products and services for customers to choose from. As the market matures with every passing day, consumers are increasingly getting the additional benefit of rationalising and planning debt sources and products to optimise their cost of portfolio borrowings.
One such innovative debt consolidation strategy is to rationalise expensive and unsecured debt sources such as Personal loans or Credit Card outstanding with secured debt which is more often than not available at much lesser interest cost. For instance, a person owning a landed property becomes eligible for taking a Loan Against Property or LAP at rates of interest which are quite attractive.
Thus, one could take a consolidated Loan Against Property (LAP) covering one’s outstanding portfolio debt, thereby allowing one to foreclose expensive unsecured loans such as Personal loans or Credit Card outstanding. This helps to reduce overall interest and debt outstanding in one move and increasingly such strategies are being sought both by individuals and businesses.
Sometimes, there is a notion that financial products like Loan Against Property are expensive as compared to vanilla home loan products given the apparent 100-200 basis points difference in the published rates. However, due to reduction in both the rate and difference in rates in recent months, even LAP products can become attractive avenues for raising medium to long term funds both for individuals and businesses.
To know how small and medium enterprises and business are using LAP as a funding source, click on the following article MSME Financing: Connecting to Real Solutions
Indicative LAP rates are shown in the table below:
|Bank||Interest Rate||Loan Amount||Processing Fees||Tenor|
|Standard Chartered||8.95% -10%||20L – 15Cr||0.40%||Upto 15 Years|
|HDFC Bank||9.25% -10%||20L – 50Cr||0.5% – 0.75%||Upto 15 Years|
|Citibank||9.25% -10.25%||20L – 10Cr||0.1% – 0.25%||Upto 15 Years|
|Axis Bank||9.5% -10.25%||20L – 20Cr||0.5% – 0.75%||Upto 15 Years|
To check the latest LAP rates and to know more about the product, please refer our Loan Against Property webpage. We would be glad to assist you in your financial consolidation quest. Please call us toll free at 18001034004 or visit our website www.mymoneymantra.com