A loan against property comes under the category of secured loans and thus gets easy approval for the loan applicant. It requires the borrower to place collateral in exchange for getting a loan sanctioned until one completes the repayment of the borrowed amount. But do you know that besides getting funded by getting a loan against property to use it for your expenses, such loans also prove to be beneficial for the borrowers? Read on to get acquainted with a few reasons that prove that a loan against property is beneficial:
Allows flexible tenure for loan repayments
Taking a loan against property allows the loan applicant to enjoy the benefits of flexible repayment tenure. Unsecured loans usually give the borrower a five to seven-year repayment window, but the same is not the case when you take a loan against property. The repayment tenure for a loan against property may even go up to 15 to 20 years which makes it easy for the borrower to afford the EMIs and does not raise any kind of stress on the borrower. A longer repayment tenure also helps reduce the interest rate and afford EMI for the repayments.
Requires minimal documentation
When you place collateral while seeking a plot loan, it becomes easy for the lender company to place their trust in you. Hence, they do not overload you with excess paperwork and approve your loan with minimal documentation. The requirement for a loan against property is very basic and thus does not put pressure on the loan seeker to gather huge piles of documents to furnish for taking a loan.
Tax benefits
Besides all the advantages one gets to enjoy by seeking a loan against property, one can also seek tax exemption and rebate, which proves to be a profitable approach. A salaried person can claim tax benefits while borrowing a loan against property under the income tax act 1961 under section 24. So, not only can you meet your financial emergencies by seeking such a loan, but you can also save on tax.
You can expect sanction of a big loan amount
One of the most significant advantages of a loan against property is that you can expect a bigger loan amount to be sanctioned while placing your property as collateral. Based on the present market value of your property placed as collateral, the lender may approve a huge amount if your property holds such a value. You can easily expect an amount of 70 to 80% of the worth of your property to be sanctioned in your name when you seek a loan against your property.
Easy eligibility criteria
Another good thing about a loan against property is that it does not require high-end eligibility criteria to fulfil, as in the case of loans without collateral. Though the eligibility criteria for a loan against property may vary from lender to lender, it is less restrictive than the loans against property. They barely need proof of you being an Indian citizen, age above 20 years, income proof and so on.
Less or nil foreclosure charges
Unlike loans without collateral that charge a significant sum of money while foreclosing the loan early, preclosure of loans against property charges you very basic or nil foreclosure charges which may differ based on the lender from whom you are taking the loan. Usually, the charges for foreclosing the loan amount to 2 to 4% of the outstanding principal amount of the loan and some lenders do not even charge this amount. In order to avail such a benefit, consider seeking a loan from a lender who has a crystal clear approach about any fees that may be levied on your loan amount during its processing phase and at any point in the future.
You can place a diverse range of property types as a collateral
While taking a loan against property, you can place various property types as collateral. May it be a residential property or a commercial property, all such property types are taken into consideration when one seeks a loan against property. The borrower can even pledge warehouse and industrial property to seek such loans.
Quick approval
Another benefit of a loan against property js is that you can get approval for such loans quickly. The application and verification process for such loans is comparatively quicker than unsecured loans. It is because a loan against property makes the borrower place collateral which makes it easy for the lenders to rely on you for the repayments. Also, applying for such a loan online has made it more time-saving and convenient for borrowers to get a loan without running to the bank or lender companies every now and then. Such loans can even get approved within the span of a day.
Competitive interest rates
Since the lender companies have a backup in the form of the property placed by you as collateral, it is easy for them to believe that you will not default on the payments. Furthermore, even if you default on a loan, they have the right to sell your property to get the balance payments. Owing to this reason, you can expect affordable interest rates for the loan you take.
Conclusion
These are a few benefits of taking a loan against property. Though all such benefits may tempt you to take a loan against property in time of need, the catch lies in finding a legit lender company or bank that does not charge you extra in the name of hidden fees. Thus, it is imperative for you to do thorough research before you seek a loan from a lending company or bank to avail the benefits of a loan against property.
