Loan Against Property

There are times when situations force you to arrange funds urgently.

Be it sudden hospitalisation, tuition fees, travel expenses, wedding, business debt consolidation, house purchase, home renovation, or anything else, a loan against property can give you funds just when you need.

What is a Loan Against Property?

A loan against property, or property loan, is a select type of mortgage loan which provides you with urgent cash against collateral. The collateral has to be a residential or commercial property owned by you. You may also apply for loan against property against a plot of land. The loan comes with attractive terms and an extended tenure which ensures that anybody can apply for a property loan.

The Top-5 Benefits of a Loan Against Property

A loan against property offers you several benefits like low interest rates, extended loan term, simple eligibility, easy availability, and tax benefits.

Here is a laydown of the benefits you may expect from a loan against property.

Low Rates of Interest

As it is a secured loan or a loan against collateral, loans against property interest rates are often lower than other secured or unsecured loans. For instance, PNB Housing loan against property interest rates start from 9.50% and go till 10.65%. The interest rate depends mostly on the borrower’s credit score and income. If you earn a decent salary and your credit score is above 800, you may expect the lowest interest rates.

Extended Loan Term

The loan term of a loan against property determines its EMI. For example, if you avail a loan amount of INR 20 lakh and choose a twenty years repayment tenure at 8%, your net monthly liability will be INR 16, 729. Conversely, if you choose the same amount, term, and interest rate, and decrease the loan term to ten years, the EMI will be INR 24,266. But, lenders will usually offer you a discounted interest rate if you choose a smaller tenure. Hence, by choosing a long term, you can pay less EMI; by choosing a short term, you will save the interest cost. 

Simple Eligibility

A loan against property is perhaps the most uncomplicated loan if you consider the eligibility. Other than the property ownership documents, you need to fulfil three other criteria.

  • Your age should be above 21, at the time of loan application, and below 65, at the time of maturity.
  • You have to be a salaried or self-employed professional or non-professional.
  • You should be able to submit documents like age, identity, and address proof, and the income (or Profit & Loss) statement.

Easy Availability

Loan against property is available easily. As the lender approves a loan against property against an asset, they know that the chances of default are less. On the flip side, you may lose possession of the mortgaged property if you default on the loan even after getting multiple repayment request letters from the lender. You can apply for a property loan in two ways – by visiting a branch or online.

Tax Benefits

A loan against property enables you to save taxes every year. If you plan to use the loan amount for business purposes, you may claim a deduction of the interest you pay, under Section 37(1). If you are a salaried professional and need a loan against property to buy a house, then Section 24(B) allows you to get a tax deduction of up to INR 2 lakh on the interest component.

Conclusion A loan against property can offer you unparalleled benefits if you choose the right lender. If you need the best loan against property interest rate, simple terms, and doorstep service delivery, PNB Housing can be your preferred choice

By Anurag Rathod

Anurag Rathod, as a blogger he used to spread all about app-based business, startup solution, on-demand business tips and ideas and so on.

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