Loans against property are also known as property loans in India. These are a type of secured loans and borrowers avail of these loans by pledging a residential or commercial property they own as security. The papers of the property that has been pledged as collateral stays with the lender until the borrower has repaid the loan in full. Once the borrower has cleared the loan, the lender returns the property papers and forfeits all rights over it. Here are a few reasons why more and more people are opting for loans against property these days. 

• A loan against property is one of the few loan options that give borrowers easy access to a substantial amount of money. In the case of these loans, lenders sanction anywhere between 50% to 60% of a property’s value as a loan. Thus, if the property you are pledging as security is worth Rs.2 Crore, your lender will sanction anywhere between Rs.1 to Rs.1.2 Crore as a loan. Not many other loans give borrowers access to such a hefty amount of money. 

• Since loans against property are secured by collateral, there is not much risk involved for the lender in lending money to the borrower. Therefore, lenders charge a very nominal interest rate on loans against property. In fact, loans against property are the second cheapest loans after home loans. Thus, if you opt for a loan against property, you will 

• Since loans against property are big-ticket loans, lenders also offer a long repayment tenor on these loans. Borrowers can get up to 20 years to repay these loans. The combination of low-interest rates and long repayment tenors makes these loans easy to repay. 

• Loans against property are also becoming popular since the funds availed of under these loans come with zero end-use restrictions. The borrower can use the money as they like. One can use the LAP amount to meet any kind of personal or professional needs. As long as you continue to pay your EMIs on time, no lender will ask you how you are spending the money. 

• You should go for property loan tax benefits. However, property tax benefits are available only in specific scenarios. For instance, if a borrower uses the loan money to buy another house, they can claim deductions up to a maximum of Rs.2 Lakh on payments made towards interest repayment under section 24(B) of the Income Tax Act. If the borrower uses the money availed of under LAP to take care of business expenditures, they can claim deductions under Section 37(1) of the Income Tax Act. 

• Lastly, since loans against property involve collateral, getting approved for these loans is also quite easy. However, do remember that to be able to avail of these loans, you will be required to provide documents that establish your complete ownership over the property you plan to pledge as collateral. Over and above these documents, your lender will require you to submit other documents as well. So, before beginning the loan against the property application process, go to your lender’s website and make a list of all the documents they will need. They will ensure quick approval and a hassle-free loan application process. 

If you own a property in your name and want funds immediately, opt for a loan against property. These loans offer several advantages and are an excellent way to raise money, especially in times of a financial emergency.