Top advantages of a loan against property
Applying for the loan against property is when the borrower needs to mortgage their property documents to the lender to avail some liquid cash in hand. The borrower can utilize the funds to buy a new property, renovation of the existing property, business expansion, and satisfy any other personal needs like a travel loan or education. To opt for the loan against property, the borrower can avail the loan at minimal documents like government id proof, property documents with clear titles. The documents like employment proof, evidence salary, CIBIL score are the ones that are primarily important documents when the loans are obtained based on the compensation. The loan against property is a safer option to opt for as there is surety for the lender against the amount’s recovery. The borrower needs to submit the documents to the lender while applying for the loans. The loan is beneficial for the borrower as it helps to get some liquid cash in hand.
There are multiple benefits for the loan against the property as the borrower can get some liquid cash on an immediate basis to suffice an individual’s needs. The borrower can utilize the funds wherever required amongst the certain conditions provided that the borrower should submit all necessary documents to the lender along with that the lender should also provide the correct data to the lender as to where the funds will be utilized for the credit opted for the loan against the property. Also, the credit obtained should be repaid by the borrower to the lender on a monthly installment basis to avoid getting penalized for non-repayment of EMI. While applying for the loan against the property, the borrower needs to mortgage the documents with the lender. Simultaneously, as he/she can continue the usage of the property even in case of applying for the credit against the given property, the borrower can avail up to 60-70% of the loans as credit for the loan against property.
Following are the advantages of the loan against the property:
Avail instant cash in hand:
The borrower can avail the liquid cash in hand by mortgaging the property documents to the lender. Thus the liquid money obtained can be used for the renovation of the property, purchase of the new property, expansion of the business, utilizing funds for the property’s development. The borrower can get cash on an immediate basis while availing the loan against the property.
Continue usage of the property even after mortgaging the property:
The borrower can continue to make use of the property even after mortgaging the property documents to the lender. The borrower can use and never needs to keep the property under the lock-up unless & until the installments are paid on time. In case of only default beyond the deadline, the lender may sell the property of the borrower.
Utilize the funds for the various purposes:
The borrower can utilize the funds for various purposes like buying a new property, expanding the existing property, or for any other purpose like marriage purpose, travel purpose, business expansion, or any different personal needs. The borrower can avail immediate cash by mortgaging the property documents to the lender.
Avail tax benefits in case of property investments:
Against the personal use of funds, the borrower has not entitled to avail the credit obtained for the tax benefit purpose. The borrower can only get tax benefits against the loan against the property, wherein the funds are utilized to buy a new property. In case of purchasing the new property, the borrower can avail of the tax benefit on the interest being paid to the lender. On the interest credit, only the borrower can claim the tax benefit. As on the principal amount being borrowed, the borrower cannot avail of income tax benefit from the loan against the property.
Easy approval process:
The borrower can avail the loans easily on loan against the property as there are minimal documents being required to approve loans. Also, there is surety amongst the lenders for the recovery against the loans provided as the borrower has already mortgaged the documents to the lender; thus, in case of default, the lender can sell the assets of the borrower to recover the money.
Flexible repayment tenure:
The borrower can avail long-term validity for the loans being benefited from the lender. The loans can get extended up to a moratorium of up to 10-15 years and sometimes can be available up to 20 years. The borrower can avail more extended moratorium against the property as the documents are being mortgaged to the lender. Hence the bank can easily extend the moratorium as there is surety of recovery.
Pre-closure of the loan:
The loan’s pre-closures are possible without any charges being levied or penalty to the borrower. The borrower can become easily debt-free by repaying the installments faster and even saving money on the repayment of taxes.
Optimum use of property:
The borrower can make the optimum use of the property against the availing of loans. Thus there is a dual benefit as the borrower can utilize the property while documents are mortgaged and avail funds for personal use while retaining the property.
Hence, multiple benefits are being available to the borrower while opting for the loan against the property. The borrower can get liquid cash in hand. Also, the borrower can continue using the property even after mortgaging the documents to the lender. Also, the repayment tenure can be kept high as there is a surety of mortgage with the lender for the recovery.