What are the benefits of a loan against property?

A Home loan is a kind of loan that is offered by thebank to various individuals so as to buy a house.The amount needs to be paid back in the form of EMI to the lenders by the borrowers.However,loan against property is acompletely different term and people misunderstand it by theHome loan.In loan against property,we get money from thebank against our property.Until the full amount of the loan is not paid,the bank from where the loan has been sanctioned keeps the original paper of the property with them.In certain cases,if the borrowers pay to repay the loan amount then the concerned bank can take legal action to own the property.

The loans that are sanctioned by banks are 50-60% of the value of the property.The interest rate that is charged on a loan against property is quite higher as compared to home loans.Let us now look at the major differences between home loans and loan against property:-

Interest
The rate of interest on a home loan is quite less as compared to loan against property. In certain cases, if the borrowers pay to repay the loan amount then the concerned bank can take legal action to own the property

Nature of property
Loan against property can be used for various purposes such as residential,commercial or industrial purpose, whereas Home loan canbe used exclusively for residential purposes such as buying a house or constructing a house.

Prepayment charges
Banks would waive off you from Prepayment charges against Home loans, but for a loanagainst property, you would have to pay Prepayment charges to the bank. So to apply for a home loanis now hassle free.

Tax exemption
On home loans, various tax deductions under section 24 is available for interest and under 80C for the principal on home loans. The tax deductions for interest in the case of loan against property are available for income from thebusiness.

Quantum of loan available
The Quantum of theloan in case of home loan is available up to 90%,whereas Quantum of loan available for aloan against property is available only up to 60%.In the recent times,the government of India is promoting home loan against the scheme housing for all.

Monitoring
Money that is received from aloan against property can be used for various purposes freely as per the need of the individual.One point that is worth noting is that the amount cannot be used for gambling,speculative business or for making any stock market investment.In the case of aHomeloan,the money that is being granted should only be used for buying a house. Banks may cross verify to see if the loan amount has been used to buy a house by conducting various site visits.


Tenure of loan sanctioned
Home loans are applicable up to 30 years consider the age and eligibility of the applicant whereas loan against property is sanctioned only up to 15 years by various banks.

Restrictions
It is quite an easy flow of policies and procedures to get a home loan,whereas it is a bit tough to sanction loan against property.Loan against property is quite time-consuming and involves a lot of documentation. It is quite easy to get a home loan within 15-20 days, but it is rather a lot difficult to get aloan against the property as a bank takes a bit longer time as it crosschecks the applicant property details as well as property details.

BrickLoans is a FinTech company focused on only Home Loans. We make fresh loans/existing loan transfer easier for you. All you have to do is contact us and we will take care of the entire process. Founded by Ex IITians and professionals with corporate experience and pedigree. We operate in following cities Mumbai, Pune, Chennai, Gurgaon, Noida, Bangalore and Hyderabad

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