The loan against property in India or LAP is a type of loan that an individual can get sanctioned against his property or assets as collateral. However, the lender organisation generally decides the credit amount depending upon the market worth of the particular property. In general, the rate falls near about 70% of the value of the property.
A loan against a property usually falls under secured loans, which serves several eminent benefits to the borrower and lender. Moreover, one can effortlessly avail of LAP by both individuals and businesses. You can make yourself avail of a loan against property in order to approach quintessential life goals like construction of a house, higher education, business expansion, wedding purpose, product development and so on.
Hence, in this article, we have mentioned some impressive benefits of availing a loan against property below:
1. Flexible Loan Amount
The loan amount you will receive through a loan against property in India always depends on the market value of your property. It can, however, reach up to Rs. 5 crores. Furthermore, a loan against property is genuinely a hassle-free option to capture an enormous amount of the property.
2. Stretched Loan Tenure
Commonly, a loan against a property scheme comes with flexible facilities such as an easy, designed pay off tenure period. The tenure period can lead up to 15 years, which is relatively more than a personal loan that generally leads for 5 years to 7 years. So, a loan against a property scheme considerably reduces the fiscal burden on the borrower.
3. Tax Benefits
- Under Section 31 of the Income Tax Act, you can obtain the tax benefits on the interest amount for the loan against property.
- Under Section 24 of the Income Tax Act, you can avail of up to Rs. 2 lakhs of tax benefits on income tax in the case you have taken the loan against property gets to construct a new house.
4. Smooth Approval Process
In comparison to other unsecured loans, a loan against property is much easier to achieve. Since it is a secured loan type, you have to give security as collateral in the availability. Moreover, the borrower needs to follow very minimal documentations as some financial institution provides some loan against property facilities as your doorstep.
5. Competitive Interest Rates
The interest rates for a loan against property is relatively minimal for the borrower since it’s a secured loan. Therefore, it results in more moderate EMIs and lessens the overall financial pressure.
6. Amenable Loan Amount Usage
The loan amount you can avail of from a loan against property fits all financial necessities such as wedding, home renovation, home construction, higher education, medical expenses and more.
7. High Eligibility
Under the loan against property, both individuals and businesses have disparities against eligibility. However, the parameters practised for both are simple to meet, such as merest income, credit history, minimum age, fiscal stability, etc.
8. No Charges for Pre-Closure
The lender does not usually charge or penalise pre-payment for a loan against property. That means the borrower can make closings in a lot easier and hassle-free way on loan against property.
9. Several Property Options and Optimal Property Usage
You can use several sorts of properties to obtain a loan against property, for example, residential property, commercial property, self-occupied house, a piece of land or others.
The flexibility of using optimal properties not only makes obtaining the loan much more straightforward, but it also helps you use the property efficiently. Moreover, the borrower recapitulates to own and make use of the property during managing capital against it.
Since a loan against property is a secured loan, it is a much more economical way of managing funds for customers to support different financial purposes. This loan type has low-interest rates, which is again more affordable than unsecured loans. In LAP, the interest rates usually range between “12% to 15%,” whereas the personal loan interest rate ranges between 12% to 25%, which comparatively excessive.
The loan against property in India serves as an easy way to finance different life goals. It helps people in both cases, individuals as well as businesses. This convenient loan type comes with a flexible loan amount, lesser interest rates, stretchable tenure period, lower EMI value, plus easy eligibility options. Additionally, the borrower can free himself from financial pressure, which allows the borrower to place his property for productive use.