Are You Looking for a Loan Against Property? Your Search Ends Here

Are you worried about funding some major expense, like education or marriage of your children or funding the healthcare costs of your family? In case you have not taken any insurance and are in need of funds to meet such expenses, you can use your property assets to take a loan. Loans against property are all purpose loans offered by major banks and housing finance companies to meet the funding needs of their clients. The only condition for such loans is that they should be used for legitimate and not speculative purposes.

Eligibility Criteria

You can easily apply for a loan against your residential or commercial immovable property, if you have the requisite ownership documents. Certain banks specify their location preferences for the properties eligible for loan. So, one should check with a bank about the eligibility of your property before filing an application. Also check for banks that have a wide network of branches spread across the country to offer quick and efficient services.

The eligibility norms for loan against property require that the applicant is

· Either an individual who is in permanent government service or is employed with a reputed company.

· Or is a self employed professional with a stable income and an income tax return payer.

Some banks even consider rental income for the purpose of calculating the applicant’s total income. In addition, the applicant should be above 24 years of age at the time of loan commencement, with the maximum age being the age of superannuation or retirement.

Loan Amount and Interest Rates

The maximum amount that you can seek varies from bank to bank, with the upper limit being 80 percent of the market value of the property, as certified by the lending agency’s approved valuation agency or your repayment capacity, whichever is lower. Some banks even offer to enhance the amount in the event of escalation in costs to be funded by the loan.

You have the choice of taking the loan at floating interest rates or rates that are fixed for 3, 5 and 10 years, depending on your personal choice. Floating rates are linked to the bank’s benchmark rate and may change in response to interest rate changes announced by the Reserve Bank of India.

Application and Documents to Be Submitted

To facilitate quick processing of your loan against property, you need to keep the originals and photocopies of certain documents ready. These include documents for

· Proof of Age

· Proof of Income

· Proof of Residence

· Educational Qualification certificates

· Income Tax Returns for the last two years

· Title Documents of the property to be mortgaged.

Security for Loan Against Property

The security for loan against property is a first charge by way of an equitable mortgage of the property to be financed and/or such other collateral securities as may be deemed fit by the lending agency. Disbursement is initiated once all the formalities including the appraisal of the property being mortgaged and legal documentation are done with and the loan has been approved.

Generally, two repayment options are available for the repayment of loan against property. These include paying the Equated Monthly Installments (EMI), which includes both the principal and the interest amount via post-dated cheques or ECS, wherein the amount gets deducted directly from your account, over a maximum period of 15 years.