Finding a loan isn’t difficult when you are in India. You can get multiple credit options from lenders of all shapes and sizes.
However, if you are looking for an uncomplicated, easy-to-understand borrowing option to fulfill your financial goals, a loan against property, a.k.a. property loan, could be your best bet.
Besides attractive interest rates, a loan against property offers several benefits, such as minimal documentation, a high loan amount, relaxed eligibility criteria, extended repayment term, and the like.
This article elaborates on the top seven reasons why you must choose a loan against property to fulfill your financial goals conveniently.
Here are the seven best reasons to choose a loan against property:
Low Interest Rates
Since property loans are backed by a borrower’s residential or commercial property, the lender’s credit risks are minimal. This assurance prompts lenders to offer affordable loan against property interest rates.
And low interest rates mean more savings for borrowers.
Loan against property interest rates depends on the credit score of the borrower and the property type.
For instance, if you decide to apply for a loan against commercial or residential property and your credit score is above 800, the interest rate starts at 8.75% for you. But, if you apply for a loan against a plot or a loan against a special property (residential or commercial), the interest rate will start at 11%.
Remember, the lower your credit score, the higher the loan against property interest rate will be.
Unlike most other purpose-based loans, a loan against property comes without any restrictions on the end use.
So, you can use the loan amount for myriad purposes, such as house construction/ purchase, home renovation/ improvement, travel, weddings, events, hospital bills, education bills, motor vehicle purchases, or anything else.
In fact, lenders never ask much about how you plan to use the loan against the property amount until they are sure that you will pay the loan amount and interest before the due date.
Besides low interest rates, this is another aspect that differentiates a loan against property from other loans.
You can avail of this loan with just six documents – identity and address proof, income statement, property papers, photograph, and processing fee cheque.
Some lenders like PNB Housing provide a free doorstep service facility using which you can submit your documents without moving out of your home.
Besides affordable interest rates, a loan against property is also popular among borrowers for its easy eligibility criteria. You can apply for a loan against the property if you legally own a residential or commercial property or a plot of land in India.
However, besides property ownership, it is also crucial to have a decent credit score and a stable monthly income.
Not many borrowers know this, but a loan against property can also let you save on taxes. You can get tax benefits of up to INR 2 lakh on the interest component if you use the loan amount to construct a new house.
However, a loan against property does not provide any tax benefits on the principal component.
High Loan Amount
A loan against property provides enough funds to eligible borrowers to fulfill all their financial dreams without worrying about money. You can use a low-interest property loan to get funds worth 65% of your repayment capability or your property’s market value certified by a valuer.
A high loan amount, coupled with low-interest rates, makes a loan against property one of the best borrowing options in India.
The last thing you can do to get money when you need it the most is to waste time.
Fortunately, a loan against property approval does not take ages since lenders quickly check the borrower’s eligibility and documents to approve the loan as early as possible.
Hence, you can trust a loan against property to get money quickly.
While low interest rates are a major reason why borrowers choose a loan against property, this credit option has several other benefits. Ensure you select the best lender to get the most from your property loan.