Any business needs capital for expanding its business. A loan is the best and the most popular way to fulfill the capital requirements of any business. But loans can sometimes get too costly, ultimately defeating its purpose – generating capital.
This article helps you discover the best loan you can avail of at attractive interest rates and longer repayment tenor – a loan against property.
What is Loan Against Property?
A loan against property or a mortgage loan is one you can apply for by keeping your residential or commercial property as the collateral guarantee.
Loan Against Property – Benefits
There are several benefits of a loan against property vis a vis other loans. They are:
1. Flexible Use
Unlike other loans, you may use the property loan amount for any purpose, which includes setting up a business.
2. Low-interest rate
Because of the collateral security, the interest rate on a mortgage loan is lower in comparison with most other loans.
3. Long repayment tenor
As a mortgage loan is a secured loan, you get a longer time of up to 20 years for paying back the capital and interest.
4. High loan amount
You may receive up to 60% of your property’s current market value.
5. Tax benefits
Under Section 37(1) of the Income Tax Act, you can claim a tax deduction on the interest you pay on the mortgage loan.
6. Fast Loan Processing
The processing time of a mortgage loan is lesser than most other loans.
7. Simple Eligibility
The eligibility criteria are relatively straightforward. You have to submit seven to eight documents, and the loan will be ready for processing.
8. Easy Documentation
A few documents are all you need to submit to be eligible to apply for the loan.
9. Multiple Repayment Options
A loan against property offers you flexible repayment options.
10. Relaxation in CIBIL Score
To apply for any other type of loan, you need to have a CIBIL score of 750 and above. Only a mortgage loan is one such loan that you may avail of even when your CIBIL score is near 750.
11. Encashes the Value of the Idle Property
You get the much-needed capital by putting your immovable asset to use.
Loan Against Property – Eligibility Criteria
The loan against property eligibility criteria is simple. You should be a salaried or self-employed professional or non-professional. If you are a salaried professional, your age should not exceed 60, and, if you are self-employed, your age should not exceed 65, on the year in which your loan matures.
Loan Against Property – Documentation
As the eligibility criteria, the documents required to apply for a loan against property is relatively easy.
A salaried professional needs to submit a few documents like photograph, age and residence proof, education qualification, income, and property documents, along with the application form.
A self-employed professional should submit documents like photograph, age and residence proof, education qualification, business profile, IT returns, and property documents, along with the application form.
Almost all major banks and NBFCs offer loans against property. Generally, CRISIL FAAA/Stable rated NBFCs provide more competitive interest rates and longer repayment tenors than other lenders. Check a few lenders and go through the terms and conditions before applying for a loan.