The Indian financial market provides several products to individuals to fund their expenses in case of a financial emergency. Lending institutions in our country offer secured as well as unsecured loans.
A house mortgage loan, widely known as a loan against property, is a secured loan where a borrower can obtain a sizable amount while keeping their immovable asset as collateral. In case the borrower fails to repay the loan within the repayment tenor, the lender holds the right to dispose of the property and recover the unpaid dues.
Keep reading to know the benefits of a loan against property.
Benefits of availing a loan against property
Any individual looking forward to avail of a loan against property must know the advantages of this credit facility. The benefits of a LAP are as follows:
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Higher loan amount
Due to its low-risk factor, lending partners usually sanction a large sum as the loan amount. The financial institution can sanction a loan amount of 70 to 75% of the current value of the mortgaged property. However, this sum varies on the nature of the property, that is, if the property is a residential or commercial property. Further, the lenders also check whether the property is occupied or not and sanction the amount accordingly.
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Lower interest rates
Since a loan against property is a secured credit instrument, the risk factor of the lender decreases. In case of any credit default, the lender can recover the unpaid dues by filing a legal claim on the mortgaged property. Further, the low mortgage loan interest rates allow candidates to plan their monthly EMIs and avoid financial burdens. Potential borrowers can check whether to choose a fixed or a floating interest while opting for a LAP and ensure a smooth borrowing experience.
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Long repayment tenor
One of the most beneficial factors of a LAP is the long repayment tenor. An individual can get a maximum repayment tenor of as long as 18 years. However, this timeframe varies from lender to lender. A longer repayment tenor allows a borrower to plan their expenses per their financial capabilities and goals. However, an individual can learn how to avail loan against property just with the help of potential borrowers must keep in mind that a longer repayment tenor increases the total payable interest. So, one should make an informed decision accordingly.
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Tax benefits on the paid interest
A borrower can enjoy tax benefits on the interest paid for a loan against property. Nevertheless, one should keep in mind that these benefits can only be applied if they use the loan amount for some specific purposes. An individual can claim tax benefits under Section 37(1) and 24(B) of the Income Tax Act on the interest paid for a LAP.
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No end-to-end restriction
The financial institutions in India sanction this credit facility without any obligation or restrictions. This means that the borrower can use the obtained amount to find their personal or professional expenses, such as home purchases, renovation, overseas education, wedding decorations, debt consolidation, etc. Borrowers can fund these significant expenses with ease by opting for a loan against property.
Nevertheless, every candidate must keep in mind to borrow only as must as they require and repay on time to keep their mortgaged property safe and ensure a smooth credit experience.
There are many financial institutions in our country that provide pre-approved offers on their financial products, such as loans against property, housing loans and many more. The exclusive offers fasten the overall application procedure and ensure prompt disbursal of the loan amount. Individuals can easily check their pre-approved offers by providing their name and contact details in the required section of their desired lending partner.
Hence, a loan against property or a house mortgage loan serves as financial assistance in times of an emergency. This credit facility comes with several benefits, and potential borrowers must compare these benefits and choose the right lender as per their needs.
