A loan against property is the best and most secure way to get additional funds at low-interest rates. You simply have to offer any commercial or residential property that you own as collateral for the loan. Taking a loan against your property will also help you get a bigger loan amount with minimum risk.
Everyone does keeping but to survive in present times, but many times the savings are not sufficient. One of the smartest and safest ways to take a Loan for the necessary money is to take a loan against property. This will solve your financial issues with less burden and stress.
Various housing finance companies deal in terms of financing loan against property. They offer very advantageous borrowing terms which you can avail of and solve your money problems.
Understanding Loan Against Property
Although, the term loan against the property is self-explanatory. To understand more, the Loan is granted to the person against the lease of the Property. To get the benefits of LAP schemes, the person should have a property, either self-occupied or any residential property. One can get a loan against a commercial property such as a factory or shop, but most companies give loans against the residential property.
The Loan Amount
The biggest question in the owner’s mind is how many loans can I avail of from their residential property? The lenders can grant the loan amount up to the 60% market value of their property, which is known as Loan to Value or LTV. The maximum tenure for repayment is of 10 years. Loans’ interest rates against property are higher than the interest rate of home loans, but it would be less than the interest rate of personal amounts.
The repayment tenure for the LAP is higher in comparison to personal loans because it has a tenure of a maximum of 5 years. Due to this, the EMI rates also reduce for the customers, and the savings can be used for your short-term requirements such as college fees, hospital expenses, marriages, vacations, etc. This is why LAP is more attractive for the customers than other loans because the repayment tenure can be extended up to 15 years with affordable EMI rates. Salaried and self-employed both can avail LAP loan due to the easy and quick documentation process.
Before opting for Loan against the Property, you keep in mind the following things:
Loan Against Property Eligibility Criteria
People should check the eligibility criteria of the LAP as it is radically different from other loans because the loan amount is decided by the secured income amount of the person. But the LAP eligibility is based on the following factors such as;
- The lender
- Applicant’s income
- Savings
- The market value of mortgage property
- Track of repayment includes repayment of credit card amounts, previous loans, saving history, and all.
Whereas the maturity of LAP for a salaried person and self-employed is 60 and 65 respectively.
Read more: id verification
Loan Against Property Required Documents
The required documents vary according to the profession of the person.
For salaried person
- Application form with photo
- Photo identity
- Address proof
- Salary slips of last three years
- Form 16
- Bank statements of the last six months
- A cheque for fee processing
- Proof of ownership of Property
For self-employed
- Along with ID proofs, the following documents are needed:
- Evidence of business
- Certificates of educational qualifications
- IT returns
- Last three years Balance Sheets and P&L statements
- Submit a business profile of the last three years
- Bank statements of last six months
- Proof of property ownership
Evaluation process
After the verification of all the documents, the owner needs to match the repayment criteria of the company. After all the examination is done, the lender is set to proceed with the loan application. The lenders may also visit the property to check its present market value.
The contracted cost
The lender charges some extra fees to the owner, such as processing fee and mortgage stamp duty and the loan against a property interest rate.
The process of the loan disbursement
The amount of the loan is distributed after all the legal formalities of the loan against the property. The loan amount is distributed in 2 or 3 instalments depending on the loan amount.
Repayment of loan
The period of repayment is 10 to 15 years for a loan against the property. Depending upon the selected interest rate, the prepayment fee is charged.
Read More: identity verification services
Process of loan transfer
If the customer finds another lender with better loan offers at the time of repayment, they can transfer their loan to the new lender. In this case, the customer is supposed to pay additional charges. The Loan determines all these charges against the loan against property interest rate calculator.
Summary
Although, it is essential to mention that a loan against property is the best way to get your funds at the time of emergence, and also it is crucial to pay all the loans at the given tenure to get back your mortgaged property.