Loan against Property - Advantages & Benefits

Secured loans have always been popular amongst borrowers and for good reasons. These are granted against some security in the form of an asset. They are affordable, quickly processed and you can get a higher amount of loan as compared to the unsecured ones. One of the most popular secured loan options is a loan against property (LAP loan). Let’s understand this in detail along with its advantages and disadvantages.

What is a Loan Against Property?

Let’s begin by understanding the LAP loan meaning. Loan against property (LAP) is a financing arrangement whereby the borrower can apply for the loan by providing any property as security against the loan. It is a secured loan option and can be availed at affordable interest rates and flexible tenures.

Advantage of Loan Against Property

Following are some of the significant benefits of a loan against property that make it a preferred option for borrowers:

• Affordable Loans: As a loan against property is a secured loan facility, you can get loans at affordable interest rates, especially when compared to unsecured loan options.
• Flexible Tenure: Loan against property offers different tenure options that you can select from. A longer tenure will result in a lower amount of EMI but higher overall interest outflow. Conversely, a shorter tenure will result in a high EMI amount but a lower interest outflow.
• High Loan Amount: As a loan against property is a secured loan, you can get a high amount of loan if your property value and income support it. Thus, it can be helpful in meeting any financial contingency. It also ensures you don’t have to apply for multiple loans to meet your needs.
• • Tax Benefits: If you avail of an LAP loan and use the funds for your business purpose, then you can claim a deduction of your interest expense as your business expenditure. This consequently can result in lower interest outflow.
• Easy to Avail: A loan against property is quite easy to apply. Being a secured loan, lenders usually process the loans quickly and disburse the loan amount. Further, certain lenders allow you to directly apply for the loan online without any hassle.
• End Use Flexibility: You have the flexibility to use the funds from the loan against property as per your needs. A greater flexibility for end use makes LAP loans quite appealing to borrowers. Whether it's about funding your business, meeting any financial emergency or education needs, a loan against property acts as a viable option.

Limitations of Loan Against Property

Loan against property also carries certain limitations. One of its limitations is that there is a risk of losing the property in case the borrower defaults. Further, the loan against property tax benefits is restricted as you can claim a deduction only if you use funds for business requirements. There is no separate provision under the Income Tax Act, 1961 that provides you with an interest deduction for an LAP loan.

Selecting the Ideal Banker

When you apply for loan against property, selecting the right lender is crucial. You can apply for Shakti Loan Against Property with IIFL Home Loans. It is a specialized loan catering to small and unorganised businesses, that provides easy access to funds to scale up and meet day-to-day operation needs. With the swift approval process, you can get the loan approval in just 30 minutes with streamlined procedures and online documentation. Apply for a loan against property today.