With a loan against property (LAP) or a land mortgage loan, you can put commercial or residential property that you own to good use and pledge it as collateral to receive the funding you need. This way, financing big-ticket expenses becomes easier and more affordable. This is because you can tap into a large reserve based on property value, and secured loans come with lower interest rates. Moreover, with no restrictions on the end-use of your loan, you are free to use the money at will. However, as your immovable asset is dear to you, you’re sure to have a few questions before pledging it. Here are the answers to the most common questions you are likely to have about a loan against property in India.
When is a loan against property a better option than other loans?
The market offers several loans built to cater to various needs. A loan against property offers substantial funding at lower interest rates as collateral is involved. There are certain times when a personal loan may do the trick. However, they are sanctioned at a higher interest rate, which might not be affordable for certain borrowers. So, a LAP becomes more practical when you need more funding at a lower interest rate.
What is the amount of loan I can get by pledging property as collateral?
The loan amount you can avail depends on the value of your property. You can calculate this by considering your property’s location, size, age and other aspects. Most lenders offer you about 75% to 90% of the market’s value of your property as a loan. Reputed lenders like Bajaj Finserv offer you up to Rs. 10.50 Crore* as per eligibility on a mortgage loan against property.
Who can apply for a loan against property?
Salaried and self-employed individuals can apply for a loan against property. However, few lenders also sanction a property mortgage loan to NRIs provided they reside in a country on the lender’s approved list and are employed with a reputed organisation.
What is the loan against property documents required?
Here are the documents that you will need to submit if you are taking a loan against property:
- Application form
- Identity proof
- Address proof
- Bank statements from the most recent 6 months
- Cheque for the processing fee
While gathering the loan against property documents required, remember that any co-owner of the property will also become an applicant in the loan. Thus, you must get their approval before deciding to pledge the property.
Additionally, if you are a salaried individual, you must submit your latest salary slips and Form 16. Alternatively, if you are self-employed, you will need to keep ready documents such as proof of educational qualifications and business presence. You will also need to have the balance sheets, tax returns and P&L from the last 3 years.
Are there any tax benefits on repaying a loan against property?
A loan against property also allows you to claim tax exemptions on the interest component of your loan. However, to utilise the tax exemption, you have to utilise the loan amount for business purposes. Salaried borrowers can also obtain tax benefits if they utilise the loan amount to purchase another residential property.
Additional Read: How can you Avail Tax benefits on your Loan Against Property?
Are you looking for an affordable, feature-packed loan against land, loan against plot, land mortgage loan, or regular Loan Against Property? Look no further than Bajaj Finserv. Here you can get funding up to Rs. 5 crore* basis eligibility at nominal interest rates. Furthermore, you can avail the Flexi Loan facility to borrow as you need from your sanction and pay interest only on the used amount. What’s more, you can enjoy an easy balance transfer facility to avail these features even if you have already taken a loan against property. To get started, simply check your pre-approved offer and view customised deals to get instant approval.
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