Financial emergencies usually come unannounced. Whether it’s meeting any urgent business requirement or medical emergency, borrowers can consider choosing a loan against property.
Not only is this one of the safest and most secure loans to opt for, but it also comes with an attractive rate of interest. This makes it more accessible to prospective loan borrowers.
Let’s take a look at its benefits.
Advantages of a loan against property
Usually finance companies provide loans against individuals’ pre-owned commercial or residential properties. These loans have innumerable benefits associated with them. Also, they can be a great help for funding an individual’s personal and professional goals.
Here are a few advantages of a loan against property that one must know
Comes with low interest rates
One of the biggest benefits of opting for a loan against property is that it comes with a low-interest rate. Being a secured borrowing option, lenders offer a nominal interest rate on this type of loan. Here the risk of lenders is minimal as they can make a legal claim on the mortgaged property in case of any loss.
Offers flexible repayment tenor
What makes the loan against property a more affordable and efficient option for borrowers is that it comes with an extended repayment tenor. Though the exact tenor differs from lender to lender, one can easily pay back its amount in a period of about 10 to 20 years.
It also allows the borrower to customise their repayment option as per their suitable equated monthly instalments.
Ensure higher sanction amount
Whether an individual needs funds for their business or individual needs, this loan helps in managing some of the big-ticket expenses. When an applicant opts for a loan against property, they get a credit amount that is equal to a large percentage of the current market value of the mortgaged property.
Provides quick loan approval
When an applicant opts for a loan against property to apply online they get easy and quick approval for it. The main reason behind this is that here lenders get a guarantee of the amount that they credit in the form of a loan.
Whether the borrower is self-employed or a salaried class, they must fulfil the loan against property eligibility criteria for availing of the loan.
Offers partial disbursement of funds
Another beneficial feature of this loan is that it allows the borrower to disburse only a part of the loan amount and the remaining amount can keep for future use. Thus, in a loan against property, the sanctioned loan amount can be disbursed in multiple trenches as per their preference and requirement.
Thus, it makes the loan extensively beneficial for those who avail of this loan for long-term working capital requirements or for construction purposes. Here the borrower needs to pay the EMI or interest only for the amount being disbursed.
Allows continued usage of property
The best part about this loan is that even if the property is kept as collateral with the lender, borrower still retains the property’s ownership. Also, this loan against rental property allows borrowers to mortgage different types of properties. It can be commercial or residential; it can also be a rented out or self-occupied property.
Comes with tax benefits
If the amount from loan against property is used for some specific purposes, then one can enjoy certain tax benefits on their interest payments. Like, if the loan amount is being used for business purposes, then one can avail of tax benefits on its interest and processing fees under Section 37(1) of the Income Tax Act.
Similarly, if the amount is being used for purchasing any residential property, then one can avail of a tax deduction of up to Rs. 2 lakh under Section 24(B) of the Income Tax Act.
In case an individual is already availing of this loan but is devoid of any of these benefits, they can opt for a loan against property balance transfer
with another lender.
Besides, reputed finance companies provide pre-approved offers to their existing customers. These offers are available for various financial products like home loans, loans against property, etc., for simplifying the loan process. Existing borrowers can check their pre-approved offers by providing their name and contact details online.
Thus, getting a loan against rental property is probably one of the easiest ways to finance one’s emergency requirements. However, to get the most profit out of it, it is advisable to be aware of its features and utility.