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How Bank Loan is Beneficial for Investment in Real Estate?

Real Estate is an asset that every individual awaits at every step of their life. To start planning for this investment is also not easy as the first question that arises in a common individual’s mind is a bank loan. How to take it, completed processes, documents required, eligibility, etc. Besides, the very afterthought is, are these loans secured, or are Bank loans beneficial? Let me tell you; all these doubts will be cleared once you have started planning for this investment. The benefits that are provided by bank loans are worth knowing. Let us briefly understand the benefits incurred and things to be remembered before taking a home loan.

What is Loan Against Property?

The Loan Against Property (LAP) is a secured loan from banks, housing companies, and non-banking financial institutions (NBFIs) against real estate, residential or commercial property. These loans carry lower interest rates than personal or business loans and are disbursed promptly. Any individual who is salaried or self-employed in a business or professional thing and owns previous property can apply for the Loan Against Property. One constant thing about LAP is that if you borrow money from the lender, they will only provide a certain percentage of the market’s value. In contrast, banks lend between 50% and 60% of the property’s value, and other private lenders provide 80% of the property’s value. As collateral is kept against a loan, it is fully secured LAP.

Benefits of Loan Against Property

Buying a sweet home is a dream of millions of individuals. Due to rising real estate properties and having limited funds, it has become a little challenging task for some families. But, every problem is accompanied by its solution. It is now possible to have relaxation in real estate investment as the government’s policies have kept a rest on home loans. Thus, anyone can have a proper consultancy and buy a property with the help of bank loans and pay EMIs timely. Here are some of the benefits of the journey of bank loans that won’t create any obstacles. They are as follows.

  • Brings Financial Benefits

Real estate Financing offers financial benefits like home appreciations, cash flow, and other tax benefits. A strategic strategy is needed for dealings in real estate investment, making the most in residential or commercial homes in the real estate business sector.

  • Home Loan = Tax Benefits  

Taking a home loan allows the borrower or investor to save taxes under section 80C of the Income Tax Act. Under this section, a person can get a deduction of up to 1 lakh. Also, under section 24(b), a person can claim a tax deduction of up to 1.5 lakh a year. This tax benefit is also available on an under-construction property that requires partial disbursement of loans according to the stage of completion.

  • Earning Passive Income

If an individual is working in a firm where he gradually transfers to another city, there is nothing in real estate that he can invest in; this is the common mentality. But, if he invests in a property and has kept on rental, he can earn an income monthly. The income that is received by rentals can be used for the payment of monthly EMIs. Later, he can sell the property at appreciated rates if he desires.

  • A Safe and Secure Purchase in Real Estate

If you plan to buy a property through a financing bank loan, it is the best way then. The documents provided by the bank are legal and cross-checked by the banking officials before granting the loan, which helps in proving in cases of uncertainty. 

  • Loan at Lower Interest Rates

Usually, Bank loans have low-interest rates and assure security about the amount and process. If you go to other options other than a bank loan, it would probably charge you high-interest rates as compared.

Things to Remember Before Taking a Home Loan

  • Eligible For PMAY Scheme

Pradhan Mantri Awas Yojana Urban (PMAY-U) was launched in 2015 by the government of India to initiate the solution of providing affordable housing. It is related to a credit-linked subsidy scheme, and the eligible people get an interest subsidy as per the government norms of this scheme. One can apply for this scheme after processing the eligibility criteria considered.

  • Interest Rates

The loan interest rate is the key factor before taking any loan for deciding the EMIs amount. One must compare the interest rates various lenders or banks offer, choosing accordingly. Besides, it is also necessary to know about the two types of interest: Fixed or Floating. 

Other Points To Be Remembered

  • Checking a Loan Alternative
  • Checking Credit Score
  • Special Offers for your House
  • Top-up Facility
  • Down Payment
  • Housing Loan or Personal Loan

Why Should You Invest in Real Estate?

  • As per recent research, Real estate financing is growing at a minimum of 30% CAGR. At this rate, the business doubles, and the profit increases every 2.5 years. 
  • Real Estate Investment Trusts (REITs) was officially introduced in India in 2014, offering an opportunity to invest in real estate without any financial property. One of the greatest advantages of REITs is that it allows investment in Grade-A commercial realty, offering an addition to the investment portfolio.
  • It also provides a passive income, stable cash flow, tax advantages, diversification, and leverage.
  • Creating Tangible assets is also the best way to establish everlasting security and an abode of living.

Lastly, it is also the best investment for the future perspectives of an individual. For this, various governments are launched for the investors and proprietors, such as Pradhan Mantri Awas Yojana (PMAY), Innovative Housing Scheme, Suraksha Housing Scheme, etc. 

So, Plan your Future House Now with Bank Loan Security and Assurance for Loan Against your Property!

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