What is a Loan Against Property and Its Benefits

What is a Loan Against Property?

Loan Against Property (LAP) is a type of finance offered by mortgaging a commercial, industrial or a residential property as collateral for the loan. Loan Against Property is offered by both banks and NBFCs. Loan Against Property is mostly taken out for major financial requirements like business investments, business expansion, purchase of business equipment, and much more. Self-occupied residential property, commercial property (offices, shops, etc.), and alternate property (industrial property, schools, hospitals, hotels, etc.) can be considered as collaterals for loan against property. Being a secured loan, LAP sanction amounts are huge at a competitive interest rate in comparison to unsecured loan. This makes Loan Against Property one of the most preferred loan options.

Benefits of Loan Against Property

• Large Sanction

  Being a secured loan, a Loan Against Property requires collateral which enables sanction of a larger loan amount compared to other types of loan. The security provided for the loan is the reason for obtaining a larger loan amount.

• Competitive Interest Rate

  Since a loan against Property is a secured loan, the bank or NBFC can easily recover a loan due to the collateral provided. The presence of collateral adds to the ease of recovering the loan compared to an unsecured loan. This results in a competitive interest rate because of the lender’s reduced risk.

• Tax Benefits

  The final use of the loan determines the tax benefits associated with borrowing against property. If the money is used for business expenditures, you are eligible for a tax deduction on the LAP under section 37(1) of the ITA. Section 37(1) allows you to deduct the interest and other fees of the loan against property from your taxes, provided that the loan amount is used to finance business operations, excluding capital expenditures and personal expenses.

• Longer Tenure, Lower EMI

  Longer tenure of Loan Against Property makes it possible to enable lower EMIs making it convenient to repay the loan.

• Easy to Avail

  The presence of collateral makes it easier to avail of a Loan Against Property. Because of the low risk involved, banks and NBFCs are willing to provide Loan Against Property to their customers.

• Easy Documentation & Approval

  The documentation and approval procedure for a loan secured by the property is usually easy and allows lenders to move forward with a straightforward loan documentation procedure.

• Retain Ownership of the Property

  Ownership of the property is maintained by the borrower in the event of a loan secured by a property. When you pledge your property as security for a loan, ownership of the asset remains unchanged. If you are not in a position to pay back the loan, you have the option to sell the property.

• Pre-Closure

  You can choose to pre-close your loan secured by the property. If the loan you were granted includes a variable interest rate, there won't be any penalties for closing the loan early. You must pay a small pre-closure fee if your loan has a fixed interest rate.

• Property Utilisation

  If you are approved for a Loan against Property and have property to pledge as collateral, you can use the loan amount to cover your financial requirements.

• Maintain Occupancy

  You will not be required to vacate your house or flat if a mortgage is obtained on it. As long as you meet the pre-payment or payback obligations, you are free to remain wherever you are.

Chola Loan Against Property

A Loan Against Property is the answer to most of your financial requirements. The large sum that a Loan Against Property provides makes it one of the most preferred types of loan. Providing collateral for a loan only lessens your financial burden enabling a lower rate of interest, lesser EMI, and relaxed loan tenure. Expenses such as the purchase or construction of a new home, business investment/expansion, and purchase of machinery could drain your financial resources. Loan Against Property offers a convenient solution for your commitments.

Chola Loan against property is a multi-purpose loan intended to finance all your dreams and those of your family members. With Chola’s Loan Against Property, you can enjoy;

• Fast-track approval process
• Part Payment and Prepayment facility
• Balance Transfer with better interest rates
• Loan from 10 lakh to 7.5 crore
• Floating rate of interest
• Tenure up to 15 Years

Chola offers three types of Loan against Property

• LAP loans for self-occupied and rented residential property
• LAP Loans for self-occupied and rented commercial properties
• LAP loans for industrial properties

Wrapping Up

Why wait? Check your eligibility for Chola Loan Against Property now and unlock a world of new possibilities! With Chola’s EMI calculator plan your finances effectively by getting a clear idea of your monthly repayment obligation. This will help in budgeting and ensure timely repayments. Additionally, it helps you to assess loan affordability and make informed decisions.

Disclaimer: The above information furnished are generic in nature and can be considered for informational purposes only. The interest rates, if mentioned in the article, can be volatile and subject to change. Please feel free to contact us for exact information on our products.