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How LAP Differs from Other Types of Loans – iBlogs
Posted on Tuesday, April 16th, 2024 | By IndusInd Bank
A loan against property distinguishes itself from other loans by leveraging property as collateral, providing borrowers with higher loan amounts while maintaining attractive interest rates and longer repayment periods.
Unlocking the door to financial opportunities often requires exploring multiple lending options. Whether you are considering purchasing a house, establishing a business, or managing unexpected expenses, several loan options are available to meet your diverse needs. Among the numerous options available, a loan against property (LAP) stands out due to its unique characteristics and flexibility. Read on to discover the features and benefits of LAP, as well as what makes it different from other loan options.
What is a Loan Against Property?
A LAP is a secured loan in which a valuable asset, such as land, house, or commercial property, can be pledged as collateral. This kind of loan can be used for different purposes, such as expanding business, funding education, consolidating debts, or meeting other financial needs. The market value of your property determines the quantum of loan, and you retain ownership during the repayment tenure.
Features and Benefits of a Loan Against Property That Differentiate it From Other Loans
| Easy to Avail | Obtaining a LAP takes less time than unsecured loans because the property used as collateral lowers the lender’s risk |
| Higher Loan Amount | Provides a higher loan amount than other types of loans because of the substantial value of the pledged property |
| Lower Interest Rates | Loans against property interest rates are lower than unsecured loans, which makes them appealing to borrowers |
| Longer Repayment Tenure | The repayment period is typically longer, lasting up to 20 years, which makes the EMIs manageable for borrowers |
| Tax Benefits | When you take a LAP for buying a house, construction, renovation, or renovating your house, you can claim a deduction of up to INR 2 lakhs in interest under Section 24(b) of the Income Tax Act |
| Flexible End Usage | There are no restrictions on the use of the borrowed amount. You can use the funds for various purposes, including business expansion, education, debt consolidation, etc. |
Things to Consider Before Applying for a Loan Against Property
Here are five important factors to keep in mind before applying for LAP:
1. Property Ownership:
Make sure there are no ownership disputes over the property used as collateral. If there are multiple owners, all parties must agree to the loan application.
2. Estimated Loan Amount:
Before seeking a loan, you must determine the exact amount required. Calculate exactly how much money you require to meet your objectives.
3. Eligibility Criteria:
Each lender has a specific loan against property eligibility criteria. Being aware of these requirements can expedite the approval process. Conduct thorough research, and only apply if you meet all of the requirements.
4. Compare Different Lenders:
Pay attention to the differences in loan against property interest rate, processing fees, and loan-to-value (LTV) ratios offered by various lenders. Being aware of these differences will help you choose the best option to suit your financial needs.
5. Loan Repayment Tenure:
Consider your monthly income and expenses to determine the appropriate loan repayment duration. Striking the right balance ensures a repayment plan that is appropriate for your financial situation.
Why Should You Apply for a Loan Against Property with IndusInd Bank?
IndusInd Bank’s loan against property allows you to access the hidden value of your property and fulfill your personal or business needs. It offers a range of appealing benefits, expedited approval plus a simplified and borrowing process. Here are some key benefits:
- Access to a higher loan amount to meet your financial needs
- Flexibility of repaying the loan over a comfortable 20-year period
- Obtain immediate, long-term funds in a quick and hassle-free manner
- Availability of balance transfer option
- Option of availing overdraft facility
- Simple eligibility criteria
Turn your property into a financial asset. Apply for a hassle-free loan against propertywith IndusInd Bank today!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
