Owning real estate assets—whether it is your home or a commercial property—can prove to be a significant financial resource. For example, you could take advantage of a loan against property (LAP).
An LAP is a secured loan that uses real estate as collateral to access funds for multiple purposes. This financial solution is a versatile and cost-effective way to unlock the hidden value of your real estate assets. In this guide, we’ll explore what an LAP is and look into its key benefits.
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What Is a Loan Against Property (LAP)?
A loan against property (LAP) is a secured loan wherein borrowers pledge their residential or commercial property as collateral to borrow money from a lender. This loan allows you to leverage your real estate without selling it. This is a flexible source of financing that you can use to fund a variety of needs, from business expansion to personal expenses such as medical bills or education costs.
What Are the Benefits of a Loan Against Property?
- Lower Interest Rates
One of the primary advantages of a loan against property is its lower interest rate compared to unsecured loans such as personal loans or credit cards. Since the lender uses your property to secure the loan, they face a reduced risk. This allows them to offer more favorable rates. This can result in substantial savings over the loan’s lifespan, making an LAP a cost-effective financing solution.
- Larger Loan Amounts
Since a loan against property is backed by a valuable asset, lenders are more comfortable offering larger loan amounts. This makes an LAP an attractive choice for those who require large sums of money for major projects like business expansion, home renovations, or to cover medical expenses.
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- Longer Repayment Tenure
With an LAP, you get longer repayment tenures in comparison to unsecured loans. Many lenders offer terms of up to 20 years. The borrower benefits from added flexibility in repayment tenures and manageable monthly installment. This extended timeframe can be especially useful for borrowers who have a stable long-term income.
- Retaining Property Ownership
Unlike the option of selling your property to raise funds, an LAP allows you to retain ownership while still unlocking the value of your real estate. This can be particularly beneficial if you expect property values to increase over time. Or perhaps you simply want to maintain ownership for personal reasons.
- Tax Advantages
The interest you pay on a loan against property can sometimes be eligible for tax deductions. This is especially true if you use the funds from the loan for business expenses or to purchase a new residential home. Doing so can offer financial relief and make the loan more cost-effective. However, it’s crucial to consult with a tax advisor or an accountant to understand the specific tax implications based on end usage of the loan amount.
Summing Up
Whether you’re planning to expand your business or wish to cover personal expenses, the flexible terms and extended repayment tenure of a loan against property make it an attractive choice. IndusInd Bank’s loan against property offers a seamless solution for raising larger sums. The loan against property eligibility criteria is fairly straightforward, allowing you to leverage your real estate assets with ease. With doorstep services and a hassle-free application process, accessing the capital you need has never been simpler. Choose IndusInd Bank for a reliable LAP that meets your financial goals.
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