Do you wish to buy a new car, redo your kitchen, or start your own business? These dreams can cost a lot of money to fulfil, and your savings may not be enough. But imagine if you had the ability to leverage your assets to make these goals a reality. You can get this done via a Loan Against Property (LAP). To get the money you need to make your goals come true, you can take out a secured loan and use your property as collateral. In this article, we’ll look at ways to use an LAP and its benefits.
Why Apply for A Loan Against Property?
A loan against property can be used to fulfil a variety of financial purposes, some of which include the following.
- Meeting Business Requirements
Businesses need money to stay afloat, whether starting new ventures or growing preexisting ones. In such instances, a LAP can be helpful by giving you some additional money and promoting the expansion of your business. LAP can assist your business with product launches and purchasing new equipment.
- Funding For Higher Education
Higher education at reputable institutions demands a sizable investment, including spending time abroad, relocating, and other expenses. You can get financial assistance to pay for the costs associated with your child's schooling by applying for a loan against property.
- Financing Celebrations
Celebrations are a time for excitement and enjoyment but they can also be costly, especially if you plan a large party or event. A loan against property can be a great financial tool to help you pay for your celebrations, whether it's a birthday, anniversary, or any other occasion. You can utilise the loan money to pay for things like decorations, food, venue rental, etc.
- Consolidating Debt
Consolidating debts may be wise if you're currently repaying several loans. Combining your outstanding loans leaves you with just one EMI to pay each month. A LAP provides you with substantial financing over an extended length of time to help with this.
Benefits Of A Loan Against Property
- Increased Loan Amount
Depending on your eligibility and supporting documentation, LAP provides a loan amount of up to a maximum of 75 per cent of the property's market value.
- Reduced Interest Rates
A property loan provides a relatively lower interest rate than personal loans because the property is used as collateral. Thus, the reduced EMIs and financial burden are a result of the lower interest rates.
- Flexible Repayment Terms
You can take a loan against property with a flexible 15-year payback term. Getting more time to repay the loan, this longer-term help to lessen your financial stress.
- Tax Benefits
There are various tax benefit on loan against property available. For example, if utilised for business, Section 37(1) of the Income Tax Act, 1961 allows LAP interest deductions. If the LAP is used to buy or build a new home, Section 24(b) of the Income Tax Act allows a deduction of up to Rs. 2 lakhs per year for loan interest.
Conclusion
LAP (loan against property) can help support both personal and business growth. It enables you to keep possession of your property without worrying about paying your debts. In addition, financial institutions ensure the safe custody of your mortgaged property documents for the duration of the loan. To learn more about your loan eligibility, basic requirements, and tax benefit on loan against property, speak to an expert.
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