 "Avoid over-leveraging with loan against property: All you need to know")
- Loans against property (LAP) are popular among businessmen who prefer them over personal loans to meet their working capital needs as the interest rates are lower
- But if the business falters, or the borrower is unable to rent out the property and earn rental income from it, he could face problems in repaying the loan
- In case of a default, the lender could repossess the property. Therein lies the main risk of LAP
- Only take this loan for productive purposes
- Have backups in place - assets like gold, ancestral property, shares, etc - that can be sold in case you run into cash flow problems
- In case of default, speak to your lender and explore the option of restructuring, that is, lowering EMI and extending tenure
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