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What Is Loan Against Property & Its Benefits?

A loan against property or LAP is a type of secured loan that you can get against commercial & residential properties. Not only are these loans disbursed at a reasonable time, but loan against property interest rate is usually lower too. Be it salaried or self-employed individuals, everybody can leverage the higher quantum of housing finance and loans.

From business-related purposes, child’s education, weddings to medical emergencies, use your property as collateral and get secured & approved loans. Let’s move ahead and understand the benefits of a loan against property.

Get a Large Sanction

People can pledge the property they own as collateral and opt for a loan against the same. The lenders often sanction a sum ranging between 75% to 90% of the property’s current market value. One of the industry’s top lenders CDL Finserv offers quick, flexible & online home loans. You can get a loan ranging from Rs. 2 lakhs to Rs. 30 lakhs. Plus, you can also enjoy low-interest rates that won’t take a toll on your pocket.

Lower Interest Rate

Since a loan against property is a secured form of borrowing, you are likely to be charged a lower interest rate on your collateral. Hence, you can significantly decrease the total cost of the loan and boost your repayment efforts. Currently, CDL Finserv charges a 12-18% interest rate on loans against property. As stated earlier, you can get an estimated interest quote through a loan against the property calculator here.

Get a Long Repay Tenure

One of the key benefits of opting for a loan against a property is that you can repay it over an extended timeframe. You can get sanctioned quick, easy loans and repay them over a tenure of 3 years to 20 years. For large loan amounts, borrowers can find a long repay tenure helpful as it allows them to tailor repayments into easy to pay monthly instalments. A long tenure backed by low-interest rates makes LAPs a promising medium to borrow capital.

Enjoy Tax Benefits

What comes as a fascinating fact is that borrowers can enjoy tax benefits on their interest payments. Section 37(1), 80C, 24B, and 80EE of Income Tax Act, 1961 enable borrowers to claim tax benefits. The 2020’s Union Budget has also proposed to increase tax benefits by a whopping Rs. 1.5 lakh on the interest you pay back to the lender. If the residential property is in your name, get your loan against the property approved at the earliest with CDL Finserv and avail of generous tax benefits.

Continuous Property Ownership

Unlike other forms of borrowing money, a loan against property entitles the borrower to retain the ownership of the property. Once the lender makes sure that your property is a marketable entity, you can get your loan approved in no time. Hence, LAPs are a safe option to borrow money since the resident stays the owner, always. Although a loan against property is a popular choice for business purposes such as expansion, marketing, promotion among others, you can always leverage LAPs for personal use.

Individual V/S Business – LAP Eligibility

Resident Indians that can be both salaried employees or self-employed professionals fulfil the loan against property eligibility. If you’re a salaried employee, you should not be more than 60 years old. For self-employed professionals and non-professionals, the age bar is set at 65 years. Loan against property documents required is different for different kinds of borrowers. Let’s break down the document list for a clear understanding.

For Salaried Individuals:

1. Age Proof (PAN, Passport, or any other national identity) 2. Residence Proof 3. Education Qualifications- Latest Degree 4. Last 3 Months’ Salary slips 5. Income Tax Returns 6. Form 16 for last 2 years 7. Bank Statement for the last 6 months (salary account)

For Self-Employed/Professionals

1. Age Proof (PAN, Passport or any other national identity) 2. Residence Proof 3. Education Qualifications- Latest Degree 4. Certificate and Proof of Business Existence 5. Last 3 years Income Tax Returns attached with balance sheets audited by a Chartered Accountant 6. Last 12 months Bank Account Statements 7. Shareholdings in Case of Private or Public Limited Company

A loan against property (LAP) is one of the easiest ways to raise money today.

Courtesy - Muthoot Finance

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