Secured Loan Against Property
Loan against property is useful for the self-employed or for people who want to expand their business. Of course, one can use it for personal purposes like renovating the house, marriage or higher studies for the children.
Loan against property is a secured loan with reasonable interest rates. In fact, it is cheaper than a personal loan. The interest rates vary from 10% pa to 16% pa.
Eligibility of loan completely depends on the property value. It can be Rs.1,00,000 or even may be Rs.5,00,00,000. Higher the property value, higher the eligibility amount. Property can be a house, commercial space or plot. It doesn’t matter whether you are using the property or you have rented it to somebody. The only thing is, property should be in the loan applicant’s name and it should have a clear title.
Banks will consider the market value of your property rather than the government registration value. Banks can grant a loan against your property up to 70% of market value.
One more thing is, you credit score report (CIBIL score) plays a big role in granting the loan. Banks will definitely check your credit score , your income statement, and your current profession to decide whether you will be able to repay the amount or not.
Since salaried employees have a lot many options, a loan against property is perfectly suitable for the self-employed to get a higher loan amount with cheaper interest rates.
Maximum tenure period of this type of loan usually ranges from 1 to 15 years. But, most of the banks prefer a maximum of 9 years. The major problem with this type of loan is tax. One cannot claim either the principal amount or the interest they pay, in tax benefit schemes.
For businessmen, yes, there are chances to claim for tax benefits. Banks can give you more details when you apply for the loan.