Loans are financial tools that help you fulfil your monetary needs. With offerings like loan against property, you can leverage your properties to finance your multiple goals without draining your hard-earned savings. However, loans are long-term debts that need to be managed prudently. You must be well aware of all the nuances and aspects of a loan before availing them.
If you are planning to take a loan against property, here are a few questions that you must ask.
What Is a Loan Against Property?
A loan against property is an amount of money that you can borrow from a bank or financial institution by pledging your property.
Questions about LAP You Must Seek Answers to.
What can you use a loan against property for?
There is no predetermined usage of loans against property. You can use it for any purpose as you like. A loan against property can be used for the purchase of house property or setting up of business. It can also be used for medical emergencies, wedding expenses, travelling, house renovation, children’s education, etc.
How much loan amount can you get with a loan against property?
Usually, lenders lend up to 50-75% of the property value as a loan. However, the amount of loan you can get against property depends on various factors. Lenders determine your eligibility, credit score, employment status, income, property location, property value etc. The loan amount is determined after the lender carries out the technical and legal verification of the property.
Which properties are eligible for a loan against property?
You can avail a loan against your commercial, industrial or residential property. The maximum amount of loan that you can get depends on the kind of property you submit as collateral.
Are there any tax benefits of a loan against property?
There are no tax benefits for loans against property if used for personal purposes.
However, if you use the loan amount for the acquisition, repair, purchase, renovation or extension of a house property, you can claim a tax deduction. A tax deduction is available on interest repayment of up to Rs 2 lakh under section 24 (b) of the income tax act 1961. Similarly, if you use it for your business, you can claim a tax deduction for the expenses incurred on processing fees, interest and documentation charges for business under section 37(1)
What is the eligibility for a loan against property?
Loan Against Property eligibility depends on various factors. You should be an Indian resident. If you are a salaried individual, your age should be between 18 to 60 years, and you should earn at least Rs 40,000 monthly. You should be a graduate if working in a private limited company or partnership firm. If you are a self-employed individual, your age should be between 21-65 years, and your business should be operational for at least three years.
Now that you are aware of the questions that you must ask before availing a loan against a property, it could be easier for you to apply for it. However, you must thoroughly research the lender and the facilities provided to ensure that the loan you avail is best for you.