- Businesspersons commonly use loan against property (LAP) to meet their cash flow requirements. They use their assets to borrow large sums at lower rates
- The salaried also use it to fund significant expenses, such as marriage, education abroad, or for debt consolidation
- Lenders typically lend up to 50-60 per cent of property value.
- Earlier, non-banking finance companies (NBFC) were aggressive in this segment but have slowed down after the liquidity crunch
- Industry experts say taking LAP from banks is advisable
- Since the amounts offered are high, some tend to over-leverage. Avoid doing so
- The borrower can also get a top-up if he has a regular repayment track record
- LAP does not offer any tax benefit. Business owners can, however, show the interest paid as an expense
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First Published: Fri, October 11 2019. 10:15 IST