8 LAP Loan Benefits: How To Leverage Your Property For A Loan?

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If you are looking to fund your business expansion plans or cover expenses such as education and marriage without borrowing from family or friends, a Loan Against Property (LAP) could be the perfect solution. This secured loan allows you to pledge your commercial or residential property to obtain the funds you need.  

So, read this guide to learn about LAP and how it can be beneficial for you.

Overview Of The LAP 

LAP or mortgage loan is a secured form of a Personal Loan. The loan amount gets disbursed against the security of your assets promised as collateral. This asset can be a residential, or a commercial building.  The loan amount is calculated based on the property’s market value and repayment capability. If the loan fails to repay, the lender can sell the pledged assets to recover the loss.

8 Benefits Of LAP

  1. Shorter and simpler loan approval process and documentation than an unsecured loan
  2. The eligibility criteria is less strict
  3. The interest rates are lower than other types of loans.
  4. Borrowers can borrow higher loan amounts up to 75% of the property’s value. 
  5. Extensive repayment tenure of up to 15 years for making repayment instalments affordable
  6. It offers an option to prepay the loan without penalties if your LAP is availed on a fixed interest. 
  7. When you take out a Instant Loan Against Property, you can still own and use the property while you are repaying the loan. But if you are unable to repay the loan, you have the option to sell the property to repay it.
  8. No fund restrictions as it can be used for multiple purposes. 

Is A Loan Against Property Taxable?

Stuck with the question, is a Loan Against Property taxable? LAP is not taxable as it is considered as a loan and not an income. The interest paid on LAP can also be claimed as a deduction from taxable income under certain circumstances, such as if the loan is used for business purposes or to purchase a residential property.

These are the two sections a borrower can avail of mortgage loan tax benefits:

  1. Section 37(1), which is for commercial purposes  
  2. Section 24(B) to fund other properties.

Section 24(B)

This section benefits salaried individuals of up to INR 2 Lakhs if they dispense the funds to acquire a new residential property. 

Section 37(1)

It enables businesses to claim tax benefits on the expenditures incurred during business functions and to obtain commercial assets. Only self-owned, unmovable properties that are litigation-free are qualified for the mortgage. It can be a rented residential property, a self-occupied residential house, a piece of land, commercial property or rented commercial property.


LAP requires less documentation, has low interest rates, and allows you to keep and use your property while repaying the debt. Tax advantages may also be offered. But, before going forward, you must carefully assess your financial status and ability to repay the loan.

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