Benefits of Taking a Loan Against Property

What is a Loan Against Property?

A Loan Against Property (LAP) is a type of secured loan where a borrower pledges their property as collateral to avail funds from a financial institution. This loan is popular because it allows individuals and businesses to unlock their property’s value without selling it.

Since an asset backs the loan, lenders offer lower interest rates compared to unsecured loans. Many people prefer the advantages of LAP as it provides high loan amounts, flexible repayment options, and the freedom to use the funds for various financial needs. Let us help you to understand Loan Against Property in detail and their advantages.

Unlocking the value of your property

A Loan Against Property empowers you to unlock the financial potential of your real estate assets, providing substantial liquidity while retaining ownership. The market value of the property determines the loan amount you can get. Generally, lenders like TVS Credit, which offers affordable Loan Against Property, provide up to 70% of the property’s assessed value. This allows you to utilize these funds without the pressure of high repayment amount.

Financial uses of Loan Against Property

For essential family needs:
If a family owns a residential property having some worth , and they need urgent funds for a child’s  education , they can apply for a Loan Against Property. Depending on the lender’s assessment, they may be eligible for a loan of up to Rs. 15 lakhs through TVS Credit. This allows them to cover tuition fees, accommodation, and other related expenses without having to liquidate their assets.

For commercial needs:
Similarly, a business owner with a commercial property having some worth can get up to 15 lakhs with TVS Credit depending on the evaluation and the property rate. The business owner can use the advantages of LAP to access funds for expanding their operations, purchasing new machinery, or boosting working capital. By leveraging their property’s value, they can achieve financial goals without disrupting their business cash flow.

Benefits of Loan Against Property

A loan against property help you unlock the various benefits, some of which have been listed below:

Lower interest rates compared to Unsecured Loans

A key advantage of a Loan Against Property is its significantly lower interest rates compared to personal or business loans, making it a smarter and more economical borrowing choice. Since lenders have the security of the property, they offer better terms and lower risk, leading to reduced interest rates. This makes LAP a cost-effective borrowing option for individuals looking for substantial funds with manageable EMIs.

High loan amount with flexible tenures

Unlike Unsecured Loans, where loan amounts are limited, collateral loans on the property allow borrowers to access larger sums, depending on the property’s value. This makes LAP an ideal option for individuals and businesses needing significant financial assistance.
LAP typically provides higher loan amounts upto 15 lakhs, depending on factors like property valuation, the borrower’s financial profile, and the lender’s policies. Since the property serves as collateral, lenders are more willing to offer higher loan amounts compared to unsecured credit options.

Additionally, LAP offers flexible repayment tenures up to 10 years. This flexibility ensures that borrowers can choose a tenure that suits their repayment capacity, balancing the EMI amount with their financial stability. At TVS Credit, repayment tenure option of up to 120* months is given, which can significantly lower your monthly financial burden.

This combination of high loan amounts and customisable tenures makes LAP a reliable funding option for both short-term and long-term financial needs.

Multipurpose usage of Loan Against Property

The loan taken against property from any financial institution can be used in various ways, making it a versatile financial tool. Some common uses include:

For Self-Employed Professionals:

• Business/Capacity Expansion: Entrepreneurs can use LAP funds to buy equipment, invest in infrastructure, or expand their business.
• Working Capital: LAP can help maintain cash flow, purchase inventory, or cover operational expenses during financial crunches.
• Business Premise Renovation: Funds can be used to renovate, upgrade, or modernise business premises to improve efficiency and attract more clients.
• Debt Consolidation: Borrowers can merge multiple debts into one, reducing overall interest rates and simplifying repayments.

For Salaried Professionals:

• Higher Education: Parents can fund their child’s higher education.
• Medical Emergencies: LAP provides financial support for medical treatments and hospital expenses.
• Home Renovation: Homeowners can renovate or improve their property without taking additional loans.
• Marriage Expenses: LAP can help cover wedding costs, including venue bookings, decorations, catering, and other related expenses.
• Debt Consolidation: Borrowers can merge multiple debts into one, reducing overall interest rates and simplifying repayments.

Get tax benefits on interest payments

Taking a Loan Against Property can also provide tax benefits under specific sections of the Income Tax Act 1961.

• If the LAP is taken for business purposes, the interest paid on the loan can be claimed as a business expense, reducing taxable income.
• If the LAP is used for home renovation, construction, or purchase of another property, the interest component of the EMI can be claimed as a deduction up to Rs. 2 lakh.

These tax benefits make LAP an even more attractive option for individuals and businesses looking to optimise their financial planning.

Things to keep in mind before applying for LAP

Now that you understand the advantages of a Loan Against Property, here are some important factors to consider before applying for one from any NBFC like TVS Credit:

1. Eligibility Criteria: The borrower must be a salaried individual or a self-employed professional
2. Property Type: Residential, commercial and rental properties are eligible, but the loan amount varies based on location and condition.
3. Credit Score: A high credit score improves approval chances and helps secure lower interest rates.
4. Loan Tenure: Longer tenures mean lower EMIs but a higher interest payout over time.
5. Processing Fees and Charges: Check for additional costs like processing fees, prepayment charges, and foreclosure penalties.

Loan Against Property is a powerful financial tool

A Loan Against Property is an excellent option for individuals looking to access funds without selling their assets. It offers lower interest rates, high loan amounts, and flexible repayment options. Whether for business, education, medical needs, or debt consolidation, LAP provides financial support for various purposes.

Your property is not just a place to live or work—it is also a powerful financial asset. By leveraging its value wisely, you can achieve your goals, secure your future, and maintain financial stability. Explore your LAP options today and take a step towards financial empowerment and freedom!

DISCLAIMER: While we ensure the information, products and services we offer through our website and associate platforms are accurate, there may be unintended inaccuracies and/or typographical errors in the content. The information on this site and related websites is for general informational purpose and in case of any inconsistencies, the details mentioned in the product/service document will take precedence. Viewers and subscribers are encouraged to seek professional advice and go through the product/service documents to make an informed decision before availing of a product or service.

*Terms & Conditions Apply – wherever applicable