Loan Against Property (LAP)
or mortgage loan
is a type of secured loan offered by banks and Housing Finance Companies (HFCs) against commercial or residential property owned by the borrower. The amount, which is availed by keeping the property as collateral till the loan is fully repaid, can be used by the borrower for various purposes
like expanding a business, funding children’s education, meeting medical expenses, and more. The maximum loan amount provided under LAP can go up to 70% of the property value. Along with being cost-effective, loans against property are reasonably convenient to avail and repay due to the relatively low mortgage interest rate
Features and Benefits of Loan Against Property
The availability of higher loan amount and the flexibility to use the amount for various purposes make LAP a better option compared to a personal loan
. Mentioned below are some of the features and benefits of availing a Loan Against Property.
- The loan is available against self-occupied residential property, such as house, apartment, flat, etc.
- It is also provided against rented residential properties.
- It is available by mortgaging commercial properties like an office building, malls, shopping complex, shops, etc.
- It can be taken against a plot of land owned by the borrower.
- Available for both salaried and self-employed individuals.
- It comes with flexible tenure and lower interest rate compared to personal loans.
- Interest paid for the Loan Against Property provides tax benefits under Section 37 (1) of the Income Tax Act, 1961.
- If the amount is used for funding a house, the interest paid on the loan provides tax benefits under Section 24 of the Income Tax Act, 1961, up to an amount of Rs. 2 lakh.