5 essential things you need to know before taking a Loan Against Property

Loan against property is an age-old way for lending and borrowing money. It has been done for centuries. Our ancestors mortgaged their homes and land to borrow money for farming, weddings and to educate their children. With time the system of taking loan against property too has become more sophisticated. You can now approach a bank and get a loan sanctioned by keeping your property as collateral.

A mortgage loan can get you a longer tenure and a higher sum. The amount you can get through mortgage loans depends on the size and valuation of the property you mortgage. The bigger the property, the higher amount of loan you can get.

You could use this loan amount at your own discretion. You can use to fund the education of your children, you can use it to fund their weddings, and you can use it to invest in other property, to invest in your business. You can even use to fund a medical procedure too.

Loan against property is the best way to get a loan. The loan against property eligibility is also minimal. You only need to have a good credit score and a property to mortgage. If you need to take a loan and are considering this kind of loan, then here are a few things you should know.

1.  Loan Against Property can get you a higher loan amount for your business or personal needs with the benefit of lower EMI. With easy documentation, speedy approvals and flexible repayment options, getting a loan is easier than any other time of loan.

2.  Loans can be applied for by individuals, either solely or jointly. Owners of the current property, in respect of which the loan is being sought, will have to be co-applicants. However, the co-applicants need not be co-owners. 

3.  To check your loan against property eligibility the lender will check the market value of your property. Banks and NBFCs give only a percentage of the market value as loan.

4.  Since a mortgage loan is a secured loan it is cheaper than personal loan. Mortgage Loan Interest Rates are way lesser than those of personal loans. Today interest rates for personal loans can range from 12.5% to 21% whereas those for mortgage loans are between 12% to 15%.

5.  The processing charge for this type of loan is 0.50% to 3% of the loan amount plus service tax. Service tax is currently 14% of the amount. The processing fee is usually deducted from the loan amount sanctioned to you.

Loan against property can serve your immediate fund requirement

Loan against property makes immediate funds accessible to you.

●       It is available for salaried and self-employed employees.

●       You enjoy the benefits of adequate loan amount and long repayment tenure.

●       It is economical than a commercial loan and the funds can be utilized for multiple purposes.

●       You can use a simple mortgage calculator.

●       The processing is easy and requires simple documentation.

●       It can be availed anywhere in India, loan against property Delhi, Mumbai, Bangalore or any other city is a secured loan that is availed by mortgaging a self-owned property with the lender.

●       The property can be residential or commercial.

●       Basically, loan against property gives you access to immediate funds by utilizing your property as collateral. Long repayment term along with low Mortgage Loan Interest Rates makes it a great choice.

Let's understand more about this loan that has emerged as a widely opted funding option for many owing to the host of advantages it has to offer.

HIGH LOAN AMOUNT WITH EXTENDED REPAYMENT TENURE

●       You can use the Loan Against Property EMI Calculator to calculate the details.

●       Varying as per the lender’s policies, you can take a loan up to 60 percent of the market value of the underlying property.

●       Also, you can take advantage of the comparatively long repayment tenure (up to 15 years)

●       This gives flexibility and ensures that the EMI is within your reach.

LOAN CAN BE UTILISED FOR MULTIPLE PURPOSES

●       The lender does not restrict the utility of the amount lent.

●       It can be utilized for various purposes ranging from a wedding expense to financing business plans or meeting any healthcare expenses.

●       You can even buy a property or any asset using this facility, which might not otherwise qualify for a loan in its own capacity.

LOAN FOR ALL

●       This facility is versatile and is not only for the salaried but also for self-employed individuals or businessmen.

SIMPLE DOCUMENTATION AND EASY PROCESSING

●       In comparison to other mortgage loans, Loan Against Property has an advantage of minimal documentation and quick disbursal.

ELIGIBILITY

●       In unsecured loans your present income will determine the loan amount.

●       However, in case of loan against property eligibility for the loan amount is determined by the present property value along with the income.

●       In addition to this, age and past credit history of the applicant can also impact the loan amount and repayment terms.

DOCUMENTATION

●       Along with the proofs of identity and application form, address, income proof, ownership documents and a property valuation report also has to be submitted.

COSTS AND REPAYMENT

●       The maximum repayment tenure is 15 years.

Depending upon the lender there may be a processing fee, mortgage loan stamp duty and other charges applicable over and above the interest applicable on the loan.