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28 SEPTEMBER, 2021
In today’s times, applying for a home loan is one of the best ways to finance a property purchase. Lenders also offer the option of unsecured loans such as a personal loan, for those who do not wish to provide collateral. However, it is important to know that an unsecured loan carries a higher interest rate as compared to a secured loan such as loan against property. A loan against property is a cost-effective option for those looking to save money on the interest rate.
Here are 4 benefits of availing a loan against property:
When you decide to apply for loan against property, the lender will evaluate the market value of your property and approve a loan based on the LTV (Loan to Value) ratio. If the property has a high market value, you can receive a high loan amount from the lender. The loan amount that you receive would also depend on your financial profile. Getting a higher loan amount will ease the burden on your savings when it comes to buying a house.
One of the biggest advantages of opting a secured loan as compared to an unsecured one is the difference in interest rates. Choosing a loan against property will get you a better interest rate as compared to a personal loan. This makes it possible for you to get a high loan amount without having to worry about high interest getting accumulated.
If you use the loan amount for business purposes, you can claim tax exemption from loan against property. Tax benefits can be claimed against the interest paid as well as fees and charges incurred on the loan. These payables would be claimed as business expenses under Section 37(1) of the Income Tax Act. As a salaried employee, you can claim tax benefits under Section 24(B) of the Income Tax Act for using the borrowed funds to buy residential property. The maximum deduction that can be claimed under this section is Rs 2 lakh.
Lenders generally tend to provide longer repayment tenures for those who opt for loan against property. This means that you can pay smaller amounts as part of EMI payments, making it easier to repay the loan without any hassle. By paying smaller EMIs, you tend to save more. This means that you would be in a better position if you ever face a financial emergency in the future. This is why going for a long tenure is an effective way of easing your repayment process.
Availing a loan against property is a big decision but can prove to be beneficial if you have a sound financial plan. Keep the above-mentioned aspects in mind before opting for the loan. Make use of a loan against property EMI calculator to get an estimate of the loan EMIs. This will help you in efficiently repaying the monthly instalments without facing any hassles, which will go a long way in boosting your credit score.
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