All Loan against property related question answered
A loan against property which is also known as mortgage loans is a kind of a multipurpose loan which can help you meet different financial needs such as your child's higher education, meeting unexpected marriage expenses, treating medical emergency, pay for your short trip or vacation, or starting a new business of your own. When you don't have enough funds to meet these needs, loan against property is one of the best options to avail as the loan comes with a lower interest rate and offers high loan amounts and repayment tenures. Before you plan to avail a LAP, you should be familiar with certain things which are mentioned below-
Are there any tax exemptions available on the LAP loan?
Unlike a home loan, LAP is not eligible for any deductions or tax benefits if a salaried person has availed the loan. However, if a businessman has availed the loan, he can claim the tax deduction on the entire interest amount paid on loan, proving that the funds have been used for improving the business.
How much loan can you get?
You can avail loans of up to 60% of the market value of your property in case of loan against property. Certain essential factors like your net monthly income, savings, investments, age, job stability, age, loans in your name, etc. also play an important role while determining the loan amount which you can avail.
What is the rate of interest and loan tenure?
A loan against property are secured loans, availing them is cheaper than personal loans. The rate of interest on these loans is in the range of 8.80% to 14.15% per annum. The tenure in case of loan against property can go up to as low as 1 year to as high as 20 years.
Are there any processing fees and penalty charges?
The processing fee in the case of LAP Loan generally ranges between 0.50% to 1% of the loan amount. The processing charges are deducted from the loan amount sanctioned to you. If you want to foreclose your loan before the completion of its tenure, lenders may charge a 2% prepayment penalty and Nil penalty on individuals who have taken loans on floating rate of interest.
What are the documents you need?
To avail a loan against property (LAP), you need a specific set of documents which are mentioned below.
In case of salaried individuals:
1) Signed application form with the latest photograph
2) Identity and Address Proof
3) Latest Salary Slips
4) Form 16
5) Bank Statements (Last 6 months)
6) Processing fee cheque
In the case of self-employed individuals:
1) Signed application form with photograph
2) Address and Identity Proof like PAN Card, Voter's ID Card, etc
3) Proof of business existence
4) Latest Income Tax Return (3 years)
5) P&L and Balance Sheet (last 3 years)
6) Bank Statements (Last 6 months)
Can I add a co-applicant against my loan?
Yes, you are eligible to add a co-applicant to your loan against property (LAP) such as your spouse or your parent that will help you to increase your loan eligibility and to avail of a higher loan amount.