Loans often help you fund your financial needs. However, they can seem complicated. There are many aspects related to loans that you might not completely understand. But, undoubtedly, knowing the nuances of loans is crucial before you avail them. One such loan about which you must have a clear idea is a loan against property. While you can visit the lender’s website to know about a loan against a property, there could be some questions that you need answers to.
Worry not. Here is a list of top loans against property queries answered in simple language.
What Is a Loan Against Property (LAP)?
A loan against property is an amount that you can borrow from a bank or financial institution by pledging your property. You can mortgage an industrial, residential, or commercial property for LAP.
Why Should You Avail a Loan Against Property?
This loan offer has many benefits. With a loan against property, you can avail of a high-value loan at competitive interest rates. It has a longer tenure than a personal and gold loan. Moreover, you can also enjoy tax benefits with LAP, subject to certain conditions.
Are there any Tax Benefits for Loan Against Property?
Yes, you can avail of tax benefits with a loan against the property if you use it for business or house property. If you use the loan amount for the acquisition, repairs, renovation, remodeling, purchase, or extension of the house property, you can claim a tax deduction of up to Rs 2 lakh on the interest repayment of the loan under section 24 (b) of the Income Tax Act, 1961. Similarly, if you use the loan amount for business purposes, you can claim the business expenses like documentation, processing fee, interest, etc., as tax deduction under section 37(1). There are no tax deductions if the loan amount is used for personal purposes.
How Much Loan Amount Can You Avail Against Your Property?
Typically, lenders approve 50-80% of the property value as a loan. However, it depends on many factors. Lenders check your eligibility based on your credit score, income, employment status, etc., while determining the loan amount. The lender also carries out a legal and technical verification of the property and checks its location before determining the loan amount.
What Is the Process of Availing a Loan Against Property?
- Check your eligibility and required documents from the lender’s website
- Check your EMI using loan against property EMI calculator to determine your affordability
- Fill the application form
- Choose the tenure and submit the documents
- Get your loan approval within a few days
Before you sign below the dotted line, you must know every aspect of a loan against property. If you have any doubts, it is always best to consult a professional or contact the lender for its redressal. Read the fine print carefully and never avail any loan with insufficient knowledge as it can cause inconvenience later.