Loans against property are a popular financing option that allows loan borrowers to access funds by pledging a residential or commercial property they own as security. The pledged collateral minimizes the risk factor for the lenders. Lenders therefore charge a low interest rate on loans against property. More importantly, they give borrowers ample time, ranging from 18 to 20 years, to repay the loan. Professionals in particular can benefit greatly from these loans. Doctors, Chartered Accountants and businessmen often need quick access to credit to expand operations and a loan against property can easily provide access to credit. Let us look at why professionals must consider availing themselves of a loan against property.

Loans Against Property: Benefits

1. Easy Access to Substantial Funds

The LTV ratio for these loans can go up to 60% to 70%. Residential properties make one eligible for higher LTV ratio loans than commercial properties. Given the high LTV ratio, loan against property become one of the few financing tools that give borrowers access to substantial credit. In simpler words, loans against property can easily allow professionals to meet business or housing-related needs.

2. Loan Against Property Tax Benefits

Professionals who use the funds availed of under property loans to fulfil business requirements can claim loans against property tax benefits under Section 37(1) of the Income Tax Act. If the borrower uses the funds to buy another property, they can claim tax benefits on the interest component of their loan under Section 24(b).

3. Long Repayment Tenor

As previously mentioned, loans against property come with a long repayment tenor. The flexibility provided to borrowers through this long tenor makes loan repayment easy and stress-free by letting the borrowers keep their EMIs within the feasible range.

4. Low Interest Rates

The presence of security and the right to sell the pledged security for loan recovery makes loans against property for professionals an entirely risk-free financing tool. Consequentially, loans against property attract a low interest rate. With an excellent credit score, a high resale value collateral and a stable job, a professional can avail of a loan against property at interest rates as low as 10.10% per annum.

Professionals planning to leverage their property for access to credit can use a loan against property EMI calculator to ensure loan affordability as well as plan repayment. Doing so would save them from late fees and penalties.

Further, after you have repaid your loan entirely, do not forget to have the lien removed from your property. When you avail yourself of a loan against property, your lender will place a lien on the property you have pledged as collateral. If you decide to sell the pledged property, the person you sell to will come to know that there exists a loan on the property. Borrowers using their property to avail of a property loan must have the lien removed from their property after they have repaid their loan. It is only after they have had the lien removed does the property belongs to them alone entirely.

Loans against property borrowers can also opt for a loan against property balance transfer facility for better loan terms and conditions, especially lower loans against property interest rates.

The use of a loan against property EMI calculator is recommended. These calculators help borrowers avail of loans keeping their repayment capacity in mind. By asking loan applicants to share their desired loan tenor and the principal and the rate of interest they are being offered, the calculators calculate one’s loan EMIs in advance, giving the borrower all the information they need at their disposal to decide the loan amount. Further, borrowers can also use the loan against property EMI calculator to strategize repayment planning and prepayments.