Taking a loan against property (LAP) can be an effective way to raise funds for various needs like expanding your business, financing a child's education, or dealing with a medical emergency. Since the property is used as collateral, the loan amount is usually higher, and the loan against property interest rate is relatively lower than other types of loans. However, there are several pitfalls that you should avoid to ensure that this financial decision does not turn into a burden.

1. Overestimating the Property Value

One of the most common mistakes is overestimating the value of your property. While your property may hold sentimental value to you, the lender will appraise it based on market value. If you assume that your property is worth more than it actually is, you might be disappointed when you receive a lower loan amount than expected. It’s essential to have a realistic understanding of your property’s market value before applying for a loan against property.