Almost every human being knows the expression ‘One Size Fits All.’ If you want to find a real-life example of something that best fits the feeling, then look no further than a loan against property.
A loan against property is one of the best loans to fulfil every need of your life. As long as you have some aspirations, there is a lender ready to fulfil your dreams at attractive interest rates.
This article equips you with the ultimate knowledge you need to extract the maximum benefits out of a loan against property and informs you about its uses, eligibility criteria, documentation formalities, and how to find a lender who can offer you the best interest rates.
Use a Loan Against Property To Save Taxes
Since loan against property eligibility criteria is uncomplicated and straightforward, any salaried or self-employed professional can use it to save taxes. A mortgage loan offers the following tax benefits:
- For Business Purpose
If you are planning to apply for a mortgage loan to expand your business by upgrading existing technology, acquiring new machinery, consolidating debt, or setting up a new plant, then there is good news for you. Section 37(1) of the Income Tax Act makes it possible for you to avail of tax deductions on interest and associated charges.
- For Salaried Professionals
If you are a salaried professional and use the funds to purchase another residential property, then you may apply for tax deductions on an amount up to Rs. 2 lakh. Use the provisions of Section 24(B) to claim your refund. You need to establish a link between the borrowed funds and its end use, though.
However, you cannot claim tax benefits if you are using the funds to transform, renovate, or modify the mortgaged property. Similarly, if you spend the loan amount on vacation, education, or marriage, you cannot apply for any deduction.
Use a Loan Against Property to Fulfil the Many Dreams of Life:
A mortgage loan is famous due to its wide ambit. Most borrowers use it for the purposes listed below. But, you may as well be a little more creative and utilise it for any purpose you want to.
You may use a loan against property to:
- Fund the higher education of your children
- Renovate a residential or commercial property
- Buy a plot of land
- Construct a house
- Purchase a house
- Buy a motor vehicle
- Consolidate your debt
- Set-up a new factory
- Renovate a commercial establishment
- Buy new machinery or upgrade technology at a manufacturing or service facility
- Fund any personal need not listed above
As you can see, a loan against property is flexible enough to suit all your requirements.
Loan Against Property Eligibility Criteria
As a mortgage loan is secured, lenders require very little convincing to approve it. Other than ownership of the property you wish to mortgage, you need to meet the following criteria to be eligible to apply for a loan against property:
- Your repayment potential
- Your age should be between 21 and 60 (if salaried) and between 25 and 65 (if self-employed)
- You should be a citizen of India
- Your CIBIL score should be above 700
- You should have IT-return file of 2 years
- You must be able to produce a 6-months bank statement
- If salaried, your salary must be above a threshold limit. If self-employed, a Chartered Accountant must certify your profit-making capacity.
Loan against property eligibility is one of the simplest. Just by meeting a few requirements can you avail of a mortgage loan very fast.
The Documents You Need to Apply for a Loan Against Property:
Like its eligibility criteria, the documents you need to submit to get a loan against property are few.
Other than the application form and photograph, you need to submit documents like age, identity, and address proof, bank statement, Form-16, Income Tax Returns file, salary slips, Profit and Loss Statement, and property documents.
While many other loans require you to submit multiple documents, you may avail of a mortgage loan by submitting fewer documents.
Choosing a lender goes a long way in improving your satisfaction level with a loan against property. A reputed lender values and respects your aspirations and provides you with features like online EMI repayment facility, minimal documentation, digital loan processing, extensive branch network, and attractive interest rates