GET LOAN AGAINST PROPERTY AT CHEAPEST INTEREST RATE
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What is Loan Against Property
The name Loan Against Property itself suggests that it is a secured loan in which property i.e Residential property, Commercial Property, Plot, Industrial Property etc is used as a collateral i.e Guarantee to take loans from Banks & NBFCs. Depending upon individual Bank or NBFC policy, one can get loan amount equals to 50 – 70 percent of market value of the Property.
TYPES OF LOAN AGAINST PROPERTY
Loan Against Commercial Property
A commercial property could be any official space, shop, or industrial real estate you own. The funds received from such loans can be used to fulfill needs like business expansion or personal financial obligations. In addition, you could also choose to invest in a new venture with the acquired sum.
Due to the nature of its usage, interest rates for commercial areas are more competitive when compared to others. However, bear in mind that financial institutions will sanction a loan amount based on the property’s current market value.
Top-Up Loan Against Property
Also known as a second mortgage, such loans can be taken over and above an existing loan on your property. However, the LAP eligibility criteria for these loans are more stringent when compared to others.
Before approving a top-up loan, lenders assess your repayment history, credit report, and other related parameters. An optimal credit score and a spotless credit history can get you an easy and hassle-free loan approval. This also includes favourable terms such as an affordable loan against property interest rate and nominal fees.
Apart from these LAP types, some lenders also offer credit based on the usage and your employment type
Lease Renting Discounting
Through such loans, you can avail funds by pledging your rented or leased property as collateral. In this case, you must submit monthly rental receipts to the lender.
On this basis, the lender will assess your overall cash flow and determine the loan amount. In addition, the financial institution will consider the EMI coverage from the monthly rent obtained. By opting for such loans, you may receive a higher sum to manage your requirements.
Loan Against Co-owned Property
In case your property has two or more co-owners, you can opt for a LAP against the co-owned property. But before mortgaging the property, you need to produce a No Objection Certificate signed by all co-owners for further processing of your application. However, remember that these rules and regulations may vary depending on the lender.
Loan Against Residential Property
Much like loan against commercial property, you could pledge your residential real estate to avail funds. Most borrowers prefer to opt for this type of LAP, especially during an emergency. The funds received through such loans could be used to consolidate multiple debts for repayment or renovate your home.
LOAN AGAINST PROPERTY ELIGIBILITY
Before applying for a LAP, it’s best to check if you meet the eligibility criteria. While most lenders have similar parameters, there may be slight variations.
Here are some common loans against property eligibility requirements:
1. Nationality: Indian
2. Age: 21-70 years
3. Monthly income: Min. ₹30,000 (if salaried)
4. Self-employed individuals must provide business proof with a profit and loss sheet.
For self-employed applicants, lenders have also set a minimum criteria for a business’ years of operations. Staying on top of these requirements could help you avoid scenarios like loan rejection.
Documents Required for a Loan Against Property
Once you meet the required eligibility criteria, you need to submit the following documents to the lender for verification after the approval of your loan:
- Proof of Identity: Aadhaar card, PAN card, voter ID, passport or driver's licence
- Proof of Address: Aadhaar card, voter ID, passport, driver's licence or utility bills
- Banks statement of last 3 months
- Past three salary slips or ITRs filed (as per occupation)
- Pledged property’s original documents
In conclusion, there are various types of LAPs you could choose from. Before you apply for this loan, be sure to assess your financial requirements and repayment capacity.
Features and Benefits of Loan Against Property
Lower Interest Rates
Under LAP, Banks can secure the property as collateral. The risk is much lower for them. It allows them to offer lower interest rates, making it an attractive option for borrowers.
Flexible Repayment Tenure
Most lenders offer flexible repayment options, allowing borrowers to choose the most suitable repayment option for their needs. It could include shorter or longer repayment periods, fixed or variable interest rates, and more.
Tax Benefits
Interest payments on a LAP can be deducted from your taxable income. It can reduce your tax liability and provide additional savings.
Higher Loan Amounts
Loan amounts are typically higher with a LAP than with other types of loans like unsecured personal loans . Since LAPs are secured loans, they tend to have higher loan amounts than unsecured loans. They have more confidence in providing the loan. The LAP can benefit those looking to borrow a large sum of money.
Flexible End-use
LAP can be used for multiple purposes, such as home renovation, debt consolidation, business expansion, and more. This makes it a great option to fund a variety of needs.
FREQUENTLY ASKED QUESTIONS ON Loan Against Property
The loan amount is determined based on the value of the property proposed for mortgage and the income of the applicant. Banks offers loan amount ranging from 50% to 70 % on the forced/distressed value of the property. It is important to note that bank’s approved lawyer will do the property title clearance & approved valuers to determine its current market worth (Market value & Forced Sale Value) of the property proposed for mortgage.
Individuals:
Salaried Employees/ Self-Employed/ Businessman/ Professionals. Non-Resident Indian (NRI), Person of Indian Origin (PIO), except national of Pakistan and Bangladesh, Overseas Citizen of India (OCI), holding valid OCI Card and valid Foreign Passport.
Non-Individual Entities:
1. Private Ltd Company and Unlisted Public Ltd Company
2. Proprietorship, Register Partnership Firm and Limited Liability Partnership Firm
3. Trust and Society
The Loan for Non individual is considered for their core activities and for meeting financial commitments related to business.
Minimum Gross Monthly Salary of Rs. 30,000/- for Salaried and Minimum annual net income of Rs. 3,00,000/- after deduction of tax, existing and proposed deductions for LAP in case of Self Employed/Businessman/Professional.
For NRI/PIO Applicants who are salaried the minimum gross monthly income is Rs. 50,000/ and the minimum income is Rs. 5,00,000/ after deduction of tax, existing and proposed deductions for LAP in case of Self Employed/Businessman/Professional.
LAP (Mortgage or Property Loan) without income proof is not accepted.
Properties may be Residential, Commercial or Vacant Plot situated at metro, urban, semi urban or rural centers. The loan may be considered for self-occupied as well as let out properties. However, the title of the property to be clear and property to be enforceable under SARFAESI.
Yes, however age criteria will apply, if his income is not taken into account for repayment. In case if the age of such applicant is more than 75 years then all his/ her legal heirs to join as co-borrower or guarantor.