Discover the key advantages of opting for a loan against property, including low interest rates, quick disbursal, flexible tenure, and multiple end-use options.
When it comes to securing funds nowadays, people are faced with a plethora of choices. You can opt for either a secured or unsecured loan, tailoring your selection to fit your specific needs. For instance, personal loans and loans against property represent prime examples of unsecured and secured loans, respectively, offering you the flexibility to utilise funds without constraints. Both avenues grant you considerable freedom in spending, making them appealing choices. However, there are distinct advantages to choosing a loan against property over a personal loan.
If you maintain a healthy credit history, adhere to timely payments, and feel confident about managing EMIs, then a loan against property presents several enticing benefits. It provides access to high-value funds at comparatively lower interest rates than other loan options. By leveraging your home or property as collateral, you can secure funds seamlessly, particularly when following a structured repayment plan. Essentially, it operates much like any other loan, aiding in your long-term financial stability.
To help you understand the benefits of opting for a loan against property over a collateral-free option, let's delve into some advantages you should consider:
Larger loan amount
By opting for a loan against property, you pledge your property as collateral, enabling lenders to sanction a significant sum. Certain lenders, such as Bajaj Finance, even extend loan amounts up to Rs. 10.50 crore, catering to substantial personal or business expenses. This surpasses what you could typically access with an unsecured loan like a personal loan.
Lower interest rates
Given that a loan against property is secured, lenders face diminished risk, resulting in lower interest rates being offered. This security allows for nominal interest rates, reducing your interest payments and overall loan costs. Conversely, collateral-free loans often come with higher interest rates to mitigate lenders' risk. With a Bajaj Finserv Loan Against Property, you can benefit from low interest rates starting at just 8% per annum.
Repay over an extended tenure
A significant advantage of a loan against property is the option to repay it over an extended tenure. With Bajaj Finance, you can repay you loan over a period of up to 15 years. This flexibility proves invaluable when repaying larger sums, as it allows you to select monthly instalments that align with your financial capabilities. The combination of an extended tenure and low interest rate renders it a cost-effective option compared to unsecured loans, which typically offer shorter repayment periods.
Tax benefits on interest payments
Another notable feature of a loan against property is its potential to provide tax benefits on interest payments. However, it's essential to understand that these benefits are contingent upon specific usage of the sanctioned funds. To clarify when these benefits are applicable, here's a comprehensive breakdown:
1. Under Section 37(1) of the Income Tax Act, 1961, you are eligible for a deduction when utilising the loan against property for business purposes. By claiming interest paid and processing fees as business expenses, you can obtain tax benefits.
2. Similarly, if you use the sanctioned amount to purchase residential property, you can avail a tax deduction on interest paid under Section 24(B) of the Income Tax Act, 1961. The maximum deduction allowable is Rs. 2 lakh, and it's imperative to furnish substantial evidence regarding fund utilisation, ensuring compliance with Section 24(B).
Versatile use of funds
A loan against property empowers you to comfortably address substantial expenses. With a substantial sanction, extended tenure, and low interest rate, you can effectively manage expenses such as renovations, home purchases, or debt consolidation without straining your financial resources. However, it's crucial to borrow prudently and repay responsibly to safeguard your collateral.
Given these advantages, borrowers often favour loan against property over collateral-free alternatives. Moreover, secured loans streamline the application process with minimal documentation requirements.
Ready to unlock the benefits of a loan against property? With Bajaj Finance, you not only gain access to low interest rates, quick disbursal, and long repayment tenure but also experience personalised customer support and a range of value-added services. Apply for a Bajaj Finserv Loan Against Property for a seamless borrowing journey towards achieving your financial goals.
