Category: Loan Against Property

Applying for and securing a mortgage against a property, whether residential or commercial, has been quite familiar and chosen option for people whenever they require a significant amount of money. You may have considered it at one point or may already have opted for it when needed. Financial issues are nothing new, and handling that properly means arranging for a substantial fund. If you own some property, it will become easier to secure a loan against it. Unlike selling off your property, a loan against property in Kolkata will be enough to arrange for the money while retaining what you own.

The Notion of getting to Enjoy Tax Benefits on the Loan

The eligibility criteria for such a loan are clear and simple. They can be easily handled by borrowing funds from a recognized lending organization while pledging commercial or residential property as collateral. Such a loan will be a secured loan, leading lenders to offer competitive interest rates, which is more beneficial for you as the applicant. This kind of loan is usually long-term and can go up to twenty years. However, it also comes with an additional benefit that you probably haven’t acknowledged. Whether you are a salaried individual or a self-employed professional, you can claim tax benefits because of this loan.

The Tax Benefit Against Under Section 24 (B)

This tax benefit is suitable for salaried individuals. When the borrowed fund is used for purchasing another residential property, the tax benefit can be claimed, and it can be up to Rs. 2 lakhs. To enjoy this benefit, you will have to establish a link between the loan amount and the end-use, which must be in accordance with Section 24 (B). Apart from that, you can claim tax deductions on the interest paid. However, the principal won’t come under the purview of this facility. If you use the funds for any other purposes such as marriage, education, holiday, and personal entertainment, then tax exemption cannot be claimed.

Tax Benefits on Top-up Loans

Sometimes, along with the loan continuing, you may need some additional funds, and for that, you can choose to opt for top-up loans. These loans have a lower interest rate than personal loans and are perfect for any sudden financial crunch that may come up. If you have all the documents and receipts to establish that the top-up loan taken will be used for acquisition, construction, renovation, repair of a residential property, the tax benefits can be easily claimed. The maximum deductible amount will be Rs. 30,000 and can be claimed only when the property is self-occupied.

The Correlation of Repayment is Essential Information

When it comes to enjoying the tax benefits on loan against property, whether about top-up loans or the primary loan itself, the calculation depends on the principal repayment in correlation to the usage of the fund. Therefore, depending on the use of the fund, the purview of the tax-deductible act will be decided. As it is not easy to gather a clear idea on the subject without proper training and experience, it will be better to hire a professional. They will find out the necessary details and inform you about the whole process in a simple way. This way, enjoying tax benefits on your loan against property will become simple.

A loan is something that anyone may require at any point. Whether it is for business or personal reasons, a sudden need for money is something that cannot be denied or ignored. If you require a loan, you will have to look for ways to arrange for the money. You can go for the more known and popular option of applying for a loan, or you can choose to try something else. For instance, you can go to a bank and apply for a loan or go to a not-so-traditional source of money and ask them to lend you some. Whatever the situation is, arranging the funds will be necessary. During this search, you will get to know about the loan against property in Kolkata concept.

Understanding the Concept Before Applying for the Loan 

It is nothing complicated or unusual; every year, millions of people do this. The concept is exactly like what the phrase suggests. Under this facility, you will get the loan amount required. However, you will have to keep something as collateral in exchange for that, and it will be your property. The process is relatively simple. If you own a property and can produce the documents proving that, you will be given the money you require. Like any other type of loan, you will have to pay the amount back along with interest. If you can not pay the amount, the additional pressure will be that your property will be possessed by the lending institution, which is the bank, in most cases.

The Amount You Can Get in the Loan 

Now, before you decide to apply for such a loan, it is necessary to understand something more, and that is, the loan amount will be a percentage of the value of the property. When applying for a loan against a property, you will be allowed to access the amount, which is a section of the property value. You will never be given the value of the property as the loan amount. Therefore, if you need a considerable amount of money and are planning to do it against a property, it will be better to check out whether the property has that much value or not. Depending on the present market condition, your property will be valued, and then the loan will be sanctioned.

Seeking Professional Help Will be for the Best 

For a person who has never taken a loan against property, understanding all the minute details and getting familiar with the whole situation will take some time. Therefore, it is advisable that you examine as much detail and information on the topic as possible. If you are finding the process to be complicated or something you are unable to handle, then contacting a capable loan advisor will be the best choice. By doing this, you will be able to find accurate and helpful information on the topic. There will be an expert who will explain the whole situation carefully.

You Can Choose a Loan Against Property, but You Have to be Careful 

Moreover, the professional helping you will have enough experience and expertise on the subject. They will be able to find out and make you aware of the potential loopholes in the loan you are opting for. One of the biggest reasons behind people losing their property or not making most of their loans is that they remain largely unaware of these loopholes. Even if you read every piece of document associated with the loan application process, you may still end up missing something. Not being an expert and not understanding the language of the financial world will do this to you. The answer to the question is clear though, if required, you can easily for loan against property.

Loans against property are not a new concept. It has been around for centuries now and has provided a plot point for several classic stories and different mediums. From the beginning, it has been a reliable way of borrowing money, as the property works as collateral and creates a beneficial exchange. Today, due to the advancements of the banking system, loan against property in Kolkata has become more interesting and secure than ever before. Hence, such loans have become pretty popular.

Understanding the Premise of the Loan

Before applying for such a loan, you need to understand that it is essentially a multi-purpose loan and can be accessed from a bank and other lending institutions. It will be better and wiser to choose a bank for this purpose, though. Another point you need to remember is that, while applying for the loan, you need to ensure that the property you are putting as collateral is currently owned by you. The amount of the loan will be 40 – 70% of the market value of the property. That range will depend on the lender’s policy, and both residential and commercial properties can be considered for this.

The Factors You Should be Knowing About

If you are thinking to apply for such a loan and do not know whether the decision will be wise or not, then researching and gathering information will help. By going through the data, you will become aware of certain factors which will assist in making an informed decision. The factors you should be mindful of are:

The Interest Rate You Have to Pay for the Loan

The interest rate you will get charged on this loan will be dependent on several factors, including but not limited to your income, amount of loan, tenure, credit history, and the lending institution you are choosing. The interest rates do differ from one bank to another too. Hence, it will be best to research and find out information regarding these points. Once you have the facts, it will be easier to create a comparative list and choose the most suitable of the options.

The Amount of Loan You Are Seeking

Usually, the amount of loan you will get depends on the market value of the property against which you will be getting the loan. The usual amount is 40 – 70% of the present market value of the property. However, if you are looking for a higher amount, it will be better to look through multiple options and choose the one offering the highest amount against the property.

The Repayment Time for the Loan Amount

Your research will reveal that most banks and lenders offer a flexible repayment tenure of about 15 years. With a longer loan tenure, you will get a lower EMI amount which will increase the affordability of the loan. However, you also need to understand that longer repayment tenure will mean increased cost of borrowing. The interest of the loan is calculated in a manner, and you will be paying more with a more extended repayment plan.

At present, there are several options one can choose when it comes to availing of funds. It is possible to pick between secured and unsecured loans and select an offering depending on the requirement. A loan against property is an excellent example of secured loans as it can be used without restraints. A loan against property is referred to as a secured mode of finance that individuals and businesses utilize to acquire funds by mortgaging residential or commercial property. Simultaneously, one can get funds similar to that of a specific percentage of the property’s value and use them according to their needs. Also, the interest rates in loans against property are competitive than unsecured loans.

Keep reading to know more about the various aspects of a Loan Against property and its advantages.

The Intention of a Loan Against Property

One of the most significant advantages of a loan against property in Kolkata is that an individual or a business can use it for different purposes. Many individuals get this loan to meet their essential life goals like their sons and daughters’ marriage, meet higher education expenses, make a down payment for a home or car, etcetera.

On the other hand, companies utilise loans against property to get funds to expand their business, invest in opportunities, buy equipment, or build new infrastructure. Simultaneously, funds availed through this loan are also utilised to bridge gaps in cash flow and marketing or promotion of their products and services. Usually, this loan is given against residential or commercial properties.

Advantages of Loan Against Property

Competitive interest rates

A loan against property is regarded a secured mode of finance because the interest rates are comparatively low. Hence, the outcome is lower EMIs that makes it convenient for the borrower to meet other financial requirements without stressing their budget.

Long Repayment Tenure

Another great benefit of Loan Against Property is that it has a long repayment period. Hence, it reduces the EMI that facilitates repayment and easing the pressure on the borrower.

Consistent Ownership of the Property

This kind of loan also allows the borrower to realise the dormant potential of the asset. The borrower continues to remain the owner of the property and utilise it according to their terms. At the same time, they continue to avail the funds which are received by mortgaging the property. Simultaneously, it is essential to not fail on meeting the EMI because it may lead to legal hassles in the upcoming days.

Eligibility for Loan Against Property

There is a small difference in Loan Against Property eligibility for businesses and individuals. There is a certain limit in annual income below which they do not approve the application for this loan when it comes to working individuals. Furthermore, there are also age limitations of minimum and maximum for lending the funds.

In the case of businesses, they need to have a certain turnover for getting a Loan Against Property. Nowadays, most lenders highlight the eligibility for Loans Against Properties on their websites so that people can find out whether they are eligible for the loan.

If you are searching for a loan against property, it needs to be understood that it is a secured finance source used by individuals and businesses. Also, one gets financed by mortgaging their residential or commercial property. An individual can receive the funds as per the particular percentage of the property’s value. Moreover, loan against property interest rates is better than the rest of unsecured loans.

The Intention of a Loan Against Property

A loan against property in Kolkata helps in many ways and can support both individuals and businesses. In general, a loan against property is used by many people to assist in meeting their many life goals like funding children education or making a down payment for starting a new business. Yes, even business owners use it to expand their processes, research and development, marketing, and many other reasons. Usually, this loan can be granted only against commercial and residential property.

Advantages of Loan Against Property

The several advantages of a Loan Against Property are given below.

Competitive Interest Rates

Since a loan against property is a secured source of finance, interest rates happen to be lower than any other alternative ways. In other words, one has to pay lower EMIs, which makes it easy for the individual borrowing the money to take care of other financial requirements without putting stress on the budget.

Long Repayment Tenure

It needs to be understood that a loan against property has a long repayment duration. Hence, it reduces the burden of paying the EMI to a great extent and facilitates easy repayment.

Continuous Ownership of the Property

This loan helps the borrower make the best of the potential of the asset. It allows them to continue using the property and use it while availing the funds without any hindrance. On the other hand, it is crucial not to default the EMI, which may invite legal issues in the upcoming days.

Eligibility for Loan Against Property

There is a small point of contrast in Loan Against Property eligibility for people and businesses. Usually, when it comes to a salaried individual, lenders select a particular annual income under which they do not approve the loan application. There is also a minimum and maximum age limit for the approval of the loan. Even businesses are required to have a particular turnover to get Loan Against Property. In contemporary times, maximum lenders describe the eligibility norms on their online sites.

Documents needed for business to get Loan Against Property are:

• Audited ITR financials
• Bank statements of the primary account along with other accounts as mentioned in the balance sheet
• Certificate of incorporation for companies
• Partnership deed and partnership authority letter (in case of a partnership firm)
• Shareholding patterns in case of private/public limited company

Besides that, one needs to attach a copy of the following:

• PAN card
• Identity proof
• Address proof
• Business continuity proof
• Passport-size photographs

Even the list of documents needed to get the loan is also given on the lender’s website.