Need money instantly for business or something personal, get a loan against property. Keep your property residential or commercial as a security and get a loan for the market price of your property. In the process, you can continue to stay in that property, it just serves as a collateral for the banks for giving loans on such big amounts.
When do we take a loan Against Property?
When there is an emergency, a wedding, business requirement, medical emergency, etc. loan against property is an easy option available that is faster and easier.
Features and benefits Loan Against Property
Low EMIs – Loan against property offers lower EMIs to make repayment for the borrower easy. The repayment is simple through monthly instalments.
Long duration – Since, the loan amount is big therefore this loan is usually offered for a longer duration can be up to 15 years or more.
Interest rates – The interest rates offered on loan against property are reasonable and affordable yet it is advisable to look for the best offers available.
Documentation – This loan requires a minimal documentation since safety is ensured with the property as collateral. However, residential proof, property papers and ID proof all undergo a verification and checked for their validity.
Joint applicants – Loan can be applied jointly with other applicants that own the property but the co-applicants need not be co-owners necessarily.
Amount – The loan amount varies usually, its 60% of the market value whereas might be less for first-time customers.
Flexible and attractive Interest rate – Interest rate vary for self-employed and salaried. Also, it depends on the property type, if it’s a commercial property that is usually expensive so interest rates are different and for residential property, rates are different. The interest rates are also flexible depending on the prime lending rate. The rates keep varying with respect to dynamic prime lending rate.
Excellent service – This loan provides a door to door service in order to get the formalities complete. However, some banks might not provide this service.
Eligibility for Loan Against Property
- Self-employed professionals can apply
- Partnership firms
- Small or mid-sized businesses can apply
- Private companies
Following documents are required for taking a loan against property. Some of the documents might vary for a salaried individual or someone who is self-employed.
ID proof and valid proof of residence – Passport, Aadhar card, Voter ID, Driving licence, Electricity bill, telephone bill
Proof of income – salary slips, bank statement, IT returns, form 16, certified income for last 3 years
Photograph – Passport size photograph
Property documents – Deed having the chain of property documents
The above-mentioned documents are mandatory in most of the cases, however, the bank may ask for additional documents in some cases.
Other charges for Loan Against Property
Processing fee – Bank charges to initiate a loan. A processing fee is charged to start the process after loan application. It can be waived off or reduced on special requests.
Prepayment charges – for the type of loan opted, different charges are applicable. If it is an adjustable loan the charges are different, if it’s a fixed rate loan, the charges are different. If it’s a combination of both then the charges again differ. Therefore, be well aware of all the clauses and charges.
Conversion charges – If a borrower wishes to change the loan type, he/she might have to pay for that conversion.
Late payment charges – If you cross the due date of paying your monthly instalment, there are late fee charges that you are liable to pay.
External advice charges – In case a bank has to take legal advice over the property documents, the bank charges from the customer for the same.
Regulatory charges – All the applicable charges of stamp duty, registration, other charges over the documentation all are paid by the customer.
Incidental charges – If for any reason the customer is unable to make the repayments, the banks already keep some amount in advance.
Cheque cancellation or bounce charges – The bank charges if the cheque post disbursement gets bounced or cancelled.
There are several charges over loan against property that an individual might not be aware of but it is advisable to know every extra amount charged to know the exact payment you are paying.
All the information shared above is subject to variation as different banks have different offers. Be clear on the policies for the bank you choose to take the loan from and see what fits your interest the best. Speculate each and every detail especially in case of loan against property since your property can be at stake and you can suffer major losses because of single ignorance. Choose wise, act wisely.,/.