What is Loan Against Property (LAP)?
A Loan Against Property (LAP) allows you to borrow money by mortgaging a residential or commercial property. The loan amount is typically a percentage of the property’s market value (usually 60-80%), and it can be used for various purposes, including home renovation.
Key Features of LAP:
Secured Loan: Since it’s secured by property, LAP usually offers lower interest rates compared to unsecured loans.
Higher Loan Amount: The loan amount can range from a few lakhs to crores, depending on the value of the property.
Longer Tenure: Loan tenure can extend up to 15-20 years, making repayment easier with lower EMIs.
Multipurpose Loan: While LAP can be used for home renovation, it is not restricted to this purpose—you can use it for other personal or business needs as well.
Why Choose LAP for Home Renovation?
Affordable Interest Rates:
LAPs typically have lower interest rates compared to personal loans, making it a cost-effective way to fund large renovation projects. Interest rates for LAP generally range from 8% to 12%, depending on the lender and your credit profile.
High Loan Amounts:
Since LAP is based on your property’s market value, it can provide a substantial amount to cover extensive home renovation costs, whether you’re looking to completely remodel or make structural repairs.
Flexible Tenure:
The longer loan tenure (up to 15-20 years) helps keep your monthly EMIs manageable, making it easier to repay without stretching your finances.
Retain Ownership:
Even though the property is mortgaged, you continue to own and use the property during the loan tenure.
Tax Benefits:
If the funds from the LAP are used specifically for home renovation, you may be eligible for tax deductions under Section 24(b) of the Income Tax Act, which allows you to claim interest deductions of up to ₹30,000 annually.