Top 10 Benefits of a Property Loan in India You Need to Know

When you need instant money, loans are often one of the first things that come to mind. There are so many kinds of loans, like credit cards, mortgages, and lines of credit, that it may seem impossible to choose just one.

However, due to rising demand for real estate, the property loan market is expected to grow to more than $850 billion by FY2026. A property loan is one of the best ways to get a secured loan if you are sure you can make your monthly payments on time and have a good credit history. The article highlights the top 10 benefits of property loans.

What is a property-against loan?

A property-against loan is a type of secured loan you can apply for. When you use your property as collateral for the loan, the loan may be instantly approved. The credit amount can be the same as the property’s current value. So, the bank approves the loan. You can get a mortgage loan on your primary home or any other property. However, you must ensure the property’s title is in your name.

Top 10 benefits of a property loan

Easy and quick approval

One of the best things about a property-against loan is the quick approval process. Getting a property loan is much easier than getting an unsecured personal loan. You should ensure there are no mortgages against the property before applying. You can use this property loan for anything, including medical bills, education, etc.

Pocket-friendly

A property-against loan or loan against property is a cheaper way to get the money you need. Many times, the interest rates on these loans are lower than those for others. Personal loans have interest rates between 12% and 25%, while property loans have interest rates between 12% and 15%. You can use the property as collateral to get a property-against loan. Mortgages can be taken out on primary homes, investment properties, rental properties, and undeveloped land.

Loan repayment time

A loan against property has a longer repayment time. These can be paid back over 15 years, while unsecured loans need to be paid back within five years. In this way, you have less financial stress.

Pre-closure option

Usually, there are no fees or penalties for pre-closing a property loan. Accounts for property loans can be closed if the full balance is paid off before the agreed-upon deadline. However, if the interest rate on your loan is fixed, you may have to pay a small fee to pay it off early.

Top-up facilities

When you get a property loan, you can request a top-up. You may get a second loan on an existing property-against loan. However, this depends on the property value and your repayment history.

Minimal debt burden

The monthly payments on a property loan are much lower than on a personal loan. These loans are less of a burden because the interest rate is lower, and you have more time to pay it back. When getting a property-against loan, a good credit score may lower the monthly payment.

Flexible loan amount

The amount you can borrow with a property-against loan is based on the market value of your property. Loans against property are approved for up to 70% of the property’s value.

Tax benefits

You also get tax benefits on the principal and the interest paid on property loans.

• Under Section 80C of the Income Tax of India 1971 Act, you can get a tax break of up to Rs 1.5 lakh per financial year.
• Under Section 24B of the Income Tax of India Act, you can deduct up to Rs. 2 lakh from the interest. 

Minimal documentation

One of the other benefits of a loan against property is that you don’t need much paperwork to get the loan. Unlike other types of loans, a property-against loan only needs basic paperwork such as identity proof, proof of ownership, etc. 

Optimum use of the property

You can get the most out of your property by getting a loan against a commercial shop. You can borrow money at a lower interest rate if you use a property. For a secured loan, a property’s market value is one of its most important things. The borrower can keep the property and still use it as collateral for a loan.

Eligibility criteria for a property loan

The requirements to get a property-against loan are not as strict.

• You have to be an Indian citizen.
• The minimum age is 21, and the maximum is 25 years old.
• You must be self-employed or salaried. Companies can also apply for a loan against property.
• You must have a certain net monthly/annual income (The income limit differs for salaried people, self-employed people, and firms or companies.)
• You must have worked for an employer, their practice, or their own business for at least a year.

How do you apply for a property-against loan?

The process to apply for property loans is easy and clear. Follow the steps below to finish your application successfully:

• Go to the official website of your lender to fill out the application form 
• Choose your “Type of Job” and “Type of Loan” from the options given
• Fill out the basic details and complete property information. 
• Upload the required documents and submit the form. 

Conclusion

Getting a property loan is easier than many people believe. If you plan to get a loan against a property, choose your lender and provide all the necessary documents with your application. Lenders make property loans available for both commercial and residential properties. However, you have to meet different conditions.

If you are ready to take a property loan, consult an expert. You can visit the Piramal Finance website and explore personal loans and services.