Why Opt for Loan Against Property?
Property Loan
Even if you are a very picky saver, there may be times when you are strained for finances. Of course, asking for loans from your family or friends may always seem to be the best option; but what happens if the amount that you desire is large? Won’t this put either your family or your friends whom you borrow from in a financially awkward state? In such cases, there are plenty of banks and financial institutions which offer many different types of loans so as to finance your needs.
So, how about leveraging your own assets that you own to avail a loan? Not only is this a very cheap method to avail a loan, but this ‘loan against property’ is also a secure loan. It basically refers to a person pledging their property which acts as a collateral so as to take the loan from the bank. In turn the bank exercises due diligence for the the asset; appraising its value and even offering up to 70% of its value as the loan amount. Being a secure loan, a person can get a higher amount than unsecured loans such as personal loans. While the tenure ranges from 1 to 9 years it may also be extended to 15 years; in case the loan amount is large. However, the interest rate differs; either floating or fixed between 12-16%.
So how can one opt for this property loan? Very simple, in fact! If the bike has more than one owner then all of the owners will be joint applicants to avail the loan. However, if there is only one person involved he/she would be the sole applicant. Every single document is extremely important which are related to the property. Besides this other important documents and identity proofs include PAN card, passport, voter ID card, bank statements, certified financial statements (of past two years). The minimum age is most often 24 years.
Another very important factor that the lenders keep in mind is the credit history which helps the bank to ascertain a person’s repayment capacity. However, there are many people who do not prefer these types of loans as they do not want to take the risk of the bank forfeiting the property. Also there are no tax incentives while making the EMI payments as they are for home loans. However, this is only the case if a person is salaried (working). Businessmen are permitted to claim tax deduction on the entire interest amount that is paid on the loan.