A Loan against property or LAP is a type of secured loan under which the property is kept as collateral for the loan amount. The amount of loan is dependent on the value of the property which generally is about 70% of the overall property value.
LAP can be sanctioned for both - individuals and businesses, as it falls under the category of secured loan. It can be used for various purposes as per your requirements like home construction, wedding in the family, higher education, and business expansion.
Here are the top 7 reasons to fund your goals with a loan against property:
1. Big-ticket size:
As property valuation decides the loan amount that you can get in this category, the ticket size is much bigger as compared to other categories like a personal loan. This allows the borrower to effectively use the property owned and get a better loan amount.
2. Nominal interest rate:
The interest rates under loan against property are comparatively lower for the borrower. As it is a secured loan, a lower interest rate translates into lower EMIs and lower interest outgo for the borrower. If you are looking for a loan that is of a higher amount and tenure, it is better to look at a loan against property as one of the leading options as it will be easier to service.
3. Longer tenure:
The tenure under loan against property can be up to 15 years whereas, in a category like personal loans, it can be for 5 to 7 years. This helps in easing out the financial pressure on the borrower. Some individuals also prefer to take a loan against property because it offers the flexibility to choose a longer tenure.
4. Easy eligibility:
As it falls under the category of secured loan, the eligibility criteria under loan against property is much simple for both individuals and businesses. Some financial institutions like Poonawalla Housing Finance also offer doorstep facilities to borrowers along with easy eligibility criteria.
5. Better alignment:
Many financial institutions give you greater flexibility with a loan against property. Under this method, you are given a sanction of a particular amount, based on the property value and you only pay interest on the amount you take as a loan, out of the total sanction amount.
By following this, you can achieve better alignment between your financial goals and the loan amount you avail. This is more relevant when you are taking a loan for a business purpose as you can adjust your loan amount based on your requirement.
6. Tax benefits:
As per section 31 of the Income Tax Act, a borrower can claim benefits for the interest amount paid fora loan against property. In addition, Section 24 of the Income Tax Act states that the borrower can take benefits up to Rs. 2 lakhs if the loan against property has been taken to construct a new house. You can benefit from these exemptions by taking a loan against property.
7. Prepayment and foreclosure charges:
As the loan under this category is for a longer tenure and higher ticket size, lenders usually do not levy any additional charges on prepayment. This makes closing the loan taken against property hassle-free and easy, as compared to other loans. In other categories, foreclosure and prepayment charges also burn a hole in your pocket, when you’re trying to reduce your debt.
These are the top reasons for taking a loan against property to fund your goals. Poonawalla Housing Finance is known for offering loan against property at a competitive interest rate with no hidden costs, quick and easy approval processes, and minimal documents. Make the most of these attractive lending offerings by Poonawalla Housing Finance to fund your financial goals easily.