When it comes to availing of funds, a loan against property is one of the most reliable and cost-effective options to go for. Be it for funding a wedding, an exotic vacation, business expansion, higher education, or medical contingencies, the borrowed amount can be used to meet all kinds of financial goals.
What is a Loan Against Property?
A loan against property is a type of secured loan wherein the borrower pledges or mortgages a property or land to the lender in exchange for a considerable amount for a fixed period. Later, over the chosen tenor, the borrower has to repay the full amount with a certain interest.
Top Benefits of a Loan Against Property
A property loan comes with a host of benefits and a wide range of exclusive features to suit the borrower’s needs. Before applying for a property loan, look out for the following benefits.
1.Sizeable Loan Amount
With a property loan, borrowers can opt for a larger amount and use it as they deem fit since there are no end-use restrictions. There are several lending institutions in the market that offer a sum as high as INR 5 Crore for a property loan.
2.Attractive Rate of Interest
property loan interest rates are affordable because lenders see it as a secured loan. The rates typically start from 8.25% and can go up to 15% depending on the type of interest rate chosen i.e. fixed rate or floating rate. A fixed rate of interest implies that the rate is fixed for the repayment tenor while a floating rate of interest tends to vary periodically as per the changing market rates.
3.Flexible Repayment Tenor
Being a long-term commitment, a property loan comes with a flexible, long tenor that makes way for smoother, efficient repayments. Borrowers who meet the eligibility criteria can choose a LAP repayment period extending up to 18 years.
4.Comfortable EMIs
A property loan offers easy EMI options for comfortable repayments. Borrowers can simply enter a few details, like the desired loan amount, chosen rate of interest and tenor in the online property loan EMI calculator to get an estimate of the monthly payable amount.
5.Easy Balance Transfer
A Balance Transfer feature allows the borrower to transfer the outstanding amount to a new lender for better loan terms and cheaper property loan interest rates. However, in that case, the borrower has to fulfill certain eligibility criteria as mentioned by the lender.
6.Tax Exemptions
Under Sections 37(1) and 24(b) of the Income Tax Act, borrowers can enjoy tax exemptions on the loan against interest rates if the amount is used for business purposes or purchasing/renovating a residential property.
7.Zero to Nominal Charges & Fees
Borrowers opting for a floating rate of interest on property loans need not pay any foreclosure charges or additional fees as per the rules of the Reserve Bank India (RBI). This hugely benefits the borrower.
8.Flexi Loan
A Flexi Loan feature allows the borrower to withdraw the requisite amount from the pre-approved credit limit and prepay the principal as per convenience. This feature is similar to an Overdraft facility offered by banks.
9.Faster Disbursals
The processing and disbursal of a property loan usually take no more than 3-4 working days. However, the borrower is required to submit necessary documents and get them verified by the lender or an authorized representative prior to that.
Loan Against Property Eligibility Criteria
To ensure that the property loan approval and processing go smooth, borrowers must check whether they are eligible for a loan in the first place. Most lenders consider the following parameters when offering a property loan–
- Must be between 23 years and 62 years of age
- Must be a citizen of India
- Must have a steady income and at least 3 years of work experience at a multinational company or a public/private organization
- Must have a decent credit score, preferably over 725
How to Apply for a Loan
To apply for a loan online, borrowers will need to follow these steps:
- Visit the lender’s website and access the property loan application form
- Fill in all personal, property and employment details along with relevant documents
- Submit the form and wait for the lender to get back to you for document verification
- Wait for the lender’s representative to evaluate the concerned property and sanction the loan amount
Borrowers can expect the loan amount to be disbursed in about 72 hours following successful processing.
The Final Word
A loan is a blessing for those who are smart enough to make use of its benefits and features. Applying for a loan against property online is easier and time-saving. All it takes is to compare the different rates of interest and find a trusted lender offering the best financial plan.
