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.
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.
Following are some of the significant benefits of a loan against property that make it a preferred option for borrowers:
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.
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.
Yes. The credit score is a 3-digit numeric figure that ranges between 300 and 900 and it depicts your credit history and credit behaviour. A higher credit score reduces the risk of the borrower thereby allowing him to sanction loans at affordable interest rates and flexible tenure.
A credit score above 750 significantly improves the chances of loan approval as it showcases responsible repayment behaviour.
The property value helps determine the loan amount. A higher property value can help you get a higher loan and vice versa.
Loan to Value (LTV) ratio shows how much loan you can get against the value of the asset. A higher LTV ratio shows you can get a higher loan amount against your property and vice versa.
Your income is a main factor in determining what amount of loan you can avail of. Your financial obligations like existing loans also play an important role here. Ideally, you should have enough disposable income to cover the loan EMI while also meeting your personal financial obligations comfortably.
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