A loan against property is a secured credit option that is gaining immense popularity. The increasing demand can be attributed to the fact that it allows borrowers to use the idle equity of a property to their advantage while continuing to enjoy ownership. Furthermore, individuals can use the approved amount to fund a host of expenses like higher education, business expansion, house construction etc.
Borrowers seeking to avail LAP must know the unparalleled benefits that this loan option offers and then make a decision accordingly.
Benefits of availing a loan against property
LAPs bestow borrowers with multiple benefits:
- High quantum loan: The most notable advantage of a LAP is its loan quantum. The loan amount here is decided depending on a property’s market value. Since lenders get a sense of security from the property kept as collateral. Therefore, they are more likely to provide high-value loan amounts to borrowers.
- Affordable interest rate: Since a loan against property is a collateral-based borrowing option, the interest rate offered is generally lower than other credit options. An affordable interest rate has a significant impact on the cost of borrowing as it translates to lower EMIs.
- Lenient eligibility and simple documentation: Another notable advantage of opting for a LAP is its lenient eligibility and simple documentation. Here, individuals can meet lender specific eligibility parameters and submit only a handful of papers to apply for this credit.
- Longer repayment tenor: One of the key benefits of availing a loan against property is that borrowers can repay loan amount over an extended tenor. Borrowers can choose a loan tenor as per their repayment capability, which reduces the monetary burden to a great extent.
- Income tax benefits: Another notable advantage of a LAP is the availability of income tax benefits on its repayment. However, a point to keep in mind here is that one can only get income tax benefit on the interest payment of this credit option.
- No restriction on end-use: Most significant benefit of availing a loan against property is that borrowers are not liable to state how they will spend the loan principal. The sanctioned amount can be used to meet any financial expenses. Individuals opting for the PMRY scheme to start a venture can alternatively access higher funds by availing loan against property.
- Pre-closure option: Borrowers who have availed of loan against property with a floating interest rate can pre-close loan amount without paying prepayment charges. However, those who have availed of a fixed interest rate are required to pay a certain amount to foreclose their loans.
- Loan against property balance transfer facility: Another standout benefit of availing loan against property is borrowers can opt for a balance transfer facility. Borrowers can shift to a new lender offering affordable interest rates if they pay higher interest with their current lender.
However, to reap innumerable benefits of a loan against property, borrowers must know how to apply for it in the first place.
How to apply for a loan against property?
The application procedure for a loan against property is simple. Borrowers must follow the steps mentioned below to apply for LAP.
1: Visit the official website of the preferred lender and choose the ‘loan against property’ option.
2: Fill out the entries with relevant information and attach documents.
3: Read the terms and conditions and click ‘Submit’.
Upon submitting, a representative from respective lending institution will contact the applicant and verify every property detail. Once a loan application is approved, borrowers will receive the loan amount within the stipulated time.
However, before applying for a LAP, individuals must meet the specific loan against property eligibility criteria.
Moreover, borrowers can look into pre-approved offers extended by leading financiers on credit instruments like loans against property, home loans etc. These offers streamline the loan application procedure and save time. Individuals can check their pre-approved offers by entering their name and contact details.
To sum up, a loan against property is an effective financial solution, allowing borrowers to make optimum use of their property. They can get a substantial loan amount at an affordable interest rate and with a longer repayment tenor that helps one to meet every financing requirement with an affordable repayment plan.
