A loan against property or LAP is a loan sanctioned against property as collateral. The loan amount is decided by the lender depending upon the market value of the property, and generally falls around 70% of the value of the property. It comes under the category of secured loans, thus serves many benefits, and can easily be availed by both individuals and businesses to address essential life goals such as higher education, marriage, construction of a house, business expansion, product development, and so on. There are many benefits of taking a loan against property:
- Under Section 31 of the Income Tax Act, tax benefits can be availed on the interest amount for a loan against property
- Under Section 24 of the Income Tax Act, tax benefits up to Rs. 2 lakhs can be availed on income tax if the loan against property is taken to build a new house.
Flexible Loan Amount
The loan amount one gets through a loan against property depends upon the market price of the property and could lead up to Rs. 5 crores. It is a hassle-free way to get a bigger amount for the property.
Competitive Interest Rates
Since loan against property is a secured loan, the interest rates are comparatively lower for the borrower, resulting in lower EMIs and reduced overall financial burden.
Longer Loan Tenure
Loan against property normally comes with flexible repayment tenure going up to 15 years in comparison to a personal loan, which generally goes for 5 to 7 years. This reduces the financial pressure on the borrower.
Different Property Options & Optimal Property Usage
To get a loan against property, you can use various types of properties like self-occupied house, commercial property, residential property or a piece of land. This flexibility not only makes taking a loan easier but also helps you utilize a property efficiently. Also, the borrower continues to own and use the property while availing funds against it.
Easy Approval Process
Given the availability of security (collateral), a loan against property is easy to get compared to other unsecured loans. The documentation requirements are also minimal with some financial institutions providing doorstep facilities as well.
Flexible Loan Amount Usage
Loan amount availed through a loan against property is fit for all monetary needs like home renovation, marriage, higher education, home construction, medical expenses and so on.
No Pre-Closure Charges
The pre-payment towards a loan against property is generally not charged or penalized by the lender. This makes closing one’s loan against property easier and hassle-free.
Differences in eligibility exist for individuals and businesses. However, the parameters used for both are easy to meet like minimum age and income, credit history, financial stability, etc.
Loan against property in India serves as an easy option to finance life goals for both individuals and businesses. It is a convenient way to get flexible loan amounts with easier interest rates, lower EMI’s, high repayment tenures and easy eligibility. The financial burden on the borrower is lower and allows the borrower to put his property to constructive use.
Looking at converting your property into a source of funds? Visit your nearest Tata Capital branch today to explore loans against property!