Features For a Loan Against Property
A Loan Against Property is available to all Salaried, Professional & self employed personnel Funds received via a Loan against property can be used for Personal and business usage.
Loan amounts that are granted for a Loan Against Property start from 10 Lakhs up to 40 crores taking into account the value of the property and the income of the applicant.
The repayment tenure allowed for a Loan Against Property is a maximum of 15 years the tenure for a personal loan is allotted according to the loan amount sanctioned and the eligibility of the applicant to repay the EMI.
The loan amount that can be sanctioned for a mortgage is from 50 up to 75% of the market value of the property depending on the type of the property.
Criterion For Property That Can be Accepted as Collateral:
To be eligible for a mortgage the property should be self owned and registered under the name of the applicant if jointly owned by family members all owners will have to be included in the loan as co applicants.
A property which is on power of attorney is not acceptable for availing a mortgage. The title deed of the property should be clear and the complete chain of ownership since inception of the property should be available.
The property should have an approved sanction plan as per the Municipal Corporation or the valid authority. The property should be in an approved location and constructed as per the sanction plan without any alterations or extra construction.
Types of properties which can be mortgaged for a Loan:
Types of properties which can be mortgaged for a Loan:
A commercial establishment such as Shop, School, Hospital, Hotel
An industrial property
A residential or commercial plot of land
Advantages of a Loan Against Property
Financial needs are part of daily life, whether it is fulfilling the mundane requirements, expanding your business or for an emergency: mortgaging your property is a good solution for securing funds conveniently.
The
Rate of Interest applicable for a mortgage is second only to a Home Loan, being a secure loan attractive rates of interest are charged as compared to other available Loans. Mortgaging your property will not disturb your working or living environment so carry on using your property as required while securing funds needed.
It may be worth the while securing a
Loan Against Property when the requirement is for increased loan amounts, as the tenure for repayment applied for a loan against property is up to 20 years. Hence the loan can be easily repaid, with a suitable EMI that is easily affordable to the applicant. Income of a family member as a co applicant can be clubbed together to get the requisite loan amount.
The documentation required to process a Loan Against Property is simple and readily available at hand. With the required documentation completed the time taken to process a Loan Against Property is 10 to 12 days. Thus funds are available in the quickest turnaround time when you need them.
End usage for which a Loan Against Property is granted.
For Expenses of a Wedding:
A wedding in the family is the celebration of a lifetime, financial planning is necessary to cover expenditures and make sure all goes as planned. Mortgaging your property to arrange the finances required will help to solve your financial issues conveniently.
Further Education
A good education is the key to a bright future! Every parent hopes to secure their child’s future by giving them the opportunity to study from the best institution. With a loan against property get the finances needed to fulfil the dreams of your child.
Business Expansion
Funding is imperative to expand and look for further business opportunities, let there be no stops to getting ahead, fund your growth by unlocking the value of your assets. Funds will be granted at a reasonable rate of interest to further your business plans.
Medical Emergency
Emergency and illness always come announced, giving your loved ones the care and the best treatment comes at a cost: getting funds against you property is a quick process to help ease the stress and finance the costs at this hour of need.
Eligibility Criteria of the Applicant
To Apply For a Loan Against Property the applicant should be Indian citizen above 23 years of age and can repay the installment up to the age of 70 years. The applicant must be gainfully employed as a Salaried, Self employed, Professional. The CIBIL Score of the applicant and co applicants must be above the required benchmark. There should not be defaults or bad debts recorded in the financial history
Parameters Required For Salaried Applicants
The work experience required for a salaried applicant is 3 years or more to apply.
The minimum income credited to the Bank account should be above ₹40 k
The salary should be transferred through ECS or a cheque deposit, salary received in cash will not be eligible.
There should be no major break in the employment record of the applicant.
Income received from pension, rent can be added to the total earning for eligibility, with valid proof of the same.
The applicant should be comfortable to pay the monthly EMI taking into account the monthly expenditures and other obligations including loans and credit card outstanding.
Eligibility Parameters for Self Employed/Professional Applicants
Loan Against Property is issued to Sole Proprietors, Partnership Firms, LLP and Private Limited Co.
The entity should be in existence for a minimum of 5 years or more with a positive net worth and a minimum return of 3 lakhs and above.
Industry should be approved as per the norms of the Bank/NBFC. Facility for mortgage will not be provided for a business that is considered as a negative profile.
The turnover for the business should be a progressive one there should be no dip in income from the business for the past two financial years and for the projected year ahead.
The banking of the firm should be healthy with no bounces or cheque returns: other loans and obligations will be taken into account when finalising eligibility for loan amount.
Steps To a LAP with Your Loan Advisors
Following steps need to be followed when applying for a Loan Against Property
Confirm value of property:
Having made the decision to mortgage your property for financial assistance, the first assessment to be made is if the value of the property is commensurate with the loan amount required. Check out the current market value of your property, Loan amount available will be 60% to 70%.
Calculate the monthly EMI to be paid:
The monthly incomings should be sufficient so that the instalment to be paid is easily affordable if large loan amounts are required the income of an earning family member can be clubbed together to boost eligibility.
Check Paperwork are in order:
Property documents required for processing the Loan should be available as originals, along with the income and KYC documents to be submitted of the applicant/ applicants involved in the loan.
Survey the offers available from various financers:
Check and compare the market offerings for the primary features as the rate of interest applicable, the tenure for the loan, fulfilment for the loan amount required. Look for the USP that suits your needs the best when choosing the financer.
The Process For a Loan Against Property
Having identified the Bank or NBFC offering the most suitable terms and conditions to process your requirement for a Loan against property the request will be processed as per the following:
1. Documentation as required is to be submitted, with the completed application form giving details of the applicant and the Loan requirement.
2. On receipt of the documents a file will be put in place with all the details of the request: a loan account number will be generated for further reference.
3. The Bank/NBFC will verify the authenticity of documentation submitted, and the confirm details of loan required as per the form submitted.
4. A request will be put forth to CIBIL for the details, which include the CIBIL score and history of all the credit lines, availed till date.
5. The legal and technical team will conduct its investigations on the validity of the property documents and on the ground status of the property.
6. The income documents and the submitted to ascertain the monthly incoming of the applicant and the financial health of the business if self employed.
7. The Bank statement given will be verified to confirm incomings, the average balance maintained, total amount paid as Emi and other obligations and any returns or bounces.
8. The value of the property will be determined and the loan amounts that can be forwarded as a mortgage keeping in mind the income and the applicant’s ability to pay the EMI.
9. The Bankers will visit the property site and also business premises of the applicant for verification and meet with the applicant to finalise the terms and conditions.
10. If the terms are agreed upon by both the Lender and the applicant, the final legal contract giving details of the Loan will be drawn.
11. The applicant will have to submit the PTM or permission to mortgage issued by the government authority with the original documents to the Financer.
12. The legal team of the Financer giving the final go ahead the Loan amount will be disbursed via a Bankers draft physically delivered to the client.
The Major Charges Applicable For a Loan Against Property
Rate of Interest
The lending rate or
Rate of Interest for a
Loan Against Property is applied at floating rate of interest which implies that the rate will be governed as per the Repo rate declared by the RBI, all fluctuations upward or downward will be adjusted accordingly by the Bank. The monthly installement will therefore be altered as per the change. Loan seekers have the option of a fixed rate which remains constant for 2 or 3 years and not for the entire tenure: to be reviewed after the fixed tenure is over.
The Interest Rate offered for a Loan Against Property has numerous variables such as:
The profile of the applicant if salaried or self employed.
The type of property for mortgage, residential, commercial, land or industrial the rate of interest will vary accordingly.
The policy of the Bank or NBFC for the lending rate may vary, depending on the cost of funds. The rate for a Loan against property is not standard and is issued as per the individual policy of the Lender.
The Legal and Technical Charges
Are the charges for conducting the verification of the property documents and establishing the legal standing of the ownership, if the norms for construction have been followed as per the rules and the approved plan for construction of the property?
Therefore a standard amount as the Legal and technical fee is to be paid in advance this amount is not refundable.
Foreclosure and Part Payment Charges
The choice to payback the entire loan amount before the tenure has been completed or a part of the amount is not at the will of the customer but is stipulated in the Loan agreement or contract. The terms for pre closure are also stipulated by the Reserve Bank of India as for Home Loans. As for the part payment terms 25% of the loan amount can be paid back in a year towards the principal of the loan amount.
Rate Chart of Major Financers
| Bank/ NBFC |
Rate of Interest |
Processing Fees |
|
HDFC Bank
|
8.75% |
0.25% |
|
ICICI Bank
|
8.90% |
Min ₹ 5000/- to a max of₹ 10000/- |
|
CITI Bank
|
7.90% |
₹ 10000/- |
|
Kotak
|
9.60% |
1% |
|
AXIS Bank
|
10.50% |
₹ 10000/- |
|
Standard Chartered
|
10% |
1% |
|
Pnb Housing
|
11% |
1% |
|
India Bulls
|
10.50% |
1% |
|
SHRIRAM
|
10.70% |
1% |
Representative example of Costs for a Loan against property
| Loan amount |
₹50 lakhs |
| Tenure |
12 years |
| Rate of Interest |
8.90% |
| Processing Fees |
₹ 10,000/- |
| Monthly Installment |
44665.25 |
Documents Required For Processing Your Loan
For Salaried Applicants
KYC Documents
Proof of identity & residence
Income Documents
Latest salary slips
Form-16 issued by present employer
Bank statements of six months preceding the month in which loan is applied for
For Self Employed Applicants
KYC Documents
Proof of identity & residence
Educational qualification certificates, degrees, diplomas, and other academic credentials (for professionals)
Income Documents
Proof of existence of business
Detailed business profile
Profit and loss sheet and balance sheets of the company for the three years preceding the one in which loan is applied for
IT Returns (of both self and the company) of the three years preceding the one in which loan is applied for
Bank statements of the six months preceding the one in which loan is applied for Property Documents to be submitted
Past title chain – Conveyance deed, sales deed, allotment letter, possession letter
Copy of approved plan for construction/ extension
Latest property tax receipt
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