Top 10 Hidden Benefits for Loan Against Property in India
The loan against property has become a preferred financing instrument lately. Reports suggest that as of June 2021, the overall outstanding amount of LAP by NBFCs, FinTech firms and public and private sector banks was Rs.6.4 lakh crores.
Top 10 Benefits Describe Below-
A higher loan amount
One of the significant hidden benefits of a loan against property is that the borrower receives a higher loan amount. The loan amount sanctioned is based on the collateral’s present estimated market value and borrowers can receive around 75%-90% of that amount as a loan. This can help individuals easily finance their big-ticket expenses.
Different types of properties are accepted as collateral
In order to avail of the loan against property, diverse property types can be used as collateral. Though most lenders ask for only commercial and residential property as collateral, it can be taken against any other types of properties as well that are listed in the lender’s application guidelines. It often includes a warehouse, industrial, shops and houses, farmhouses and bungalows, and even multi-purpose buildings. Some financial institutions even consider co-owned properties as collateral, but this varies among lenders.
Affordable interest rates
The loan against property rates is quite affordable compared to financing options, As these are secured loans, lenders offer low-interest rates to borrowers. This can help individuals to save money on their EMI outflow and monthly expenses.
Borrowers can check out the mortgage loan interest rates in India provided by different lenders and choose the one that meets their budget and affordability.
Avail tax benefits
Another hidden benefit of a loan against property is that it helps the borrower to claim tax deduction under Section 24 (B). However, one should know how to avail of tax deductions on loans against property.
Tax benefits on the interest paid on a loan against property can be obtained under Section 31 of the Income Tax Act. If the loan against property is accepted to construct a new home, Section 24 of the Income Tax Act allows tax benefits on income tax of up to Rs. 2 lakhs to be claimed.
Less documentation required
The documentation required to apply for the loan against property is minimal. The documents that the borrower needs to furnish are:
- Address proof (passport, rent agreement or electricity bills)
- Income proof (bank account statement, salary details)
- Identity proof (PAN card, Aadhaar card, GST registration document in case of a firm or a company)
- Employment letter, salary slips, etc.
- Title deed or property-related documents
- Quick application process
One of the core benefits of a loan against property is that its application and verification process is much. Today the entire process is online and one can apply loan against property in a few simple steps from anywhere at any time.
Easy approval procedure
What makes this financing option more convenient and time-saving is its easy and fast approval. Once the online application form is submitted along with all the documents, the representatives will guide the applicant on further steps. The lender will approve the loan after the property and document verification.
The flexible loan repayment duration
The loan repayment tenor of a loan against property is long and flexible. This allows the applicant to repay the loan amount according to his/her convenience.
Almost no or minimal foreclosure charges
What makes the loan against property a preferable option is that it has minimal or negligible foreclosure charges. Most financial institutions either charge around 2%-4% of the overall principal amount as a foreclosure charge. Some even charge nothing; however, ensure to proceed with only those lenders with no hidden charges.Visit starpod to read more informative blogs
Funds can be used for any purpose
The funds received from loans against property can be used for professional and personal purposes, as there are no strict restrictions. The purpose can be any, including overseas education, wedding, home renovation, medical emergencies, etc.
However, before applying for a loan against property, borrowers should check their pre-approved offers which are offered by some renowned financial institutions. These offers help in streamlining the application process. Such pre-approved offers are available across various financial products such as home loans. To check these offers, one has to provide the name and contact details.
However, before applying for a loan against property one should also check the eligibility criteria of the lender and carry out detailed market research before settling for a lender.
To speed up the loan against property application procedure, respected financial institutions and NBFCs frequently make pre-approved offers to their clients. Borrowers can check their pre-approved offers, which are available on various financial products, before applying for property loans. To check the same, they must supply information such as their name and phone number.
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