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Finance

What Is a Loan Against Property and What Are Its Benefits?

A loan against property, or LAP, is a secured loan that can be used to purchase commercial or residential real estate. Not only are these loans disbursed quickly, but the interest rates on loans against property are usually lower as well. Everyone, whether salaried or self-employed, can benefit from the increased amount of housing finance and loans available. If you own any pre-owned property, you may simply stroll into any Bank of Maharashtra branch and apply for a loan. Use your property as collateral to acquire secured and approved loans for anything from company to child education to weddings to a medical emergency.

Get a large sanction:

People can use their own property as collateral and take out a loan against it. Lenders frequently approve a loan amount ranging from 75% to 90% of the property’s current market value. Bank of Maharashtra, one of the industry’s top lenders, offers rapid, flexible, and online home loans. A loan ranging from Rs. 5 lakhs to Rs. 10 crores is available. You can also benefit from low-interest rates that won’t hurt your wallet. To determine the monthly instalment, go to the Bank of Maharashtra website and use the home loan calculator.

Lower Interest Rate:

Because a loan against property is a secured type of borrowing, the interest rate on your collateral is likely to be lower. As a result, you can reduce the total cost of the loan and increase your payback efforts. The Bank of Maharashtra currently charges a 9.35% interest rate on property loans.

Select long tenure:

One of the main advantages of taking out a loan against your property is that you can repay it over a longer period of time. You can acquire quick, easy loans that you can return over a period of 3 to 20 years. Borrowers with big loan amounts may find that a longer repayment term is beneficial because it allows them to customise repayments into manageable monthly instalments. LAPs are a promising way to borrow money because they have lengthy-term and low-interest rates.

Tax benefits:

Borrowers can receive tax benefits on their interest payments, which is a curious fact. Borrowers can claim tax benefits under sections 37(1), 80C, 24B, and 80EE of the Income Tax Act of 1961. The Union Budget for 2020 also proposes to enhance tax benefits on interest paid to lenders by a whopping Rs. 1.5 lakh. If you own a residential property, have your loan against it approved as soon as possible.

Property Ownership:

A loan against property, unlike other types of borrowing money, allows the borrower to keep ownership of the property. You can have your loan approved quickly if the lender confirms that your property is a marketable entity. As a result, LAPs are a safe way to borrow money because the resident is always the owner. Although a loan against property is frequently used for corporate goals such as growth, marketing, and promotion, LAPs can also be used for personal purposes.

Individual vs Business:

Residents of India, whether salaried employees or self-employed professionals are eligible for the loan against property. You should not be more than 60 years old if you are a salaried employee. The age limit for self-employed professionals and non-professionals is 65 years. The documentation needed for a loan against property varies depending on the type of borrower.

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