Loan against Property as the term implies is a method of securing finance, by mortgaging a property; Most Banks & NBFC’S actively market Loan against property. It works well for both the Lender & the borrower, as the need for finance is conveniently fulfilled while the Lender can be confident of lending large amounts as a secure loan; collateral in the form of property is pledged to the Loan provider for the loan amount received.
Competitive interest rates
Since a Loan Against Property is a secured mode of finance, the interest rates are comparatively lower. This results in lower EMIs, making it easy to for the borrower to address other financial needs without straining his/her budget.
Long repayment tenure
A Loan Against Property generally has long repayment tenure. This brings down the EMI, thereby facilitating repayment and easing the burden on the borrower.
Continuous ownership of the property
A Loan Against Property helps the borrower unlock the dormant potential of the asset. The borrower continues to own and use the property, while availing funds for the same. However, it’s essential to not default on EMI which might lead to legal hassles in the future
High value loans
Near about get up to 70% of the property value as loan amount
The eligibility of a loan against property depends upon various factors including the following important ones:
List of Documents for Loan Against Property Application
List of Documents for Loan Against Property Application
Steps involved in the process of obtaining loan are:
1.Application
You will need to fill in a loan application with details, personal and professional, loan requirement, details of the property intended for mortgage etc. Make sure the details are filled in accurately
2.Processing:
the loan processing stage, the stage at which the loan process gains actual momentum. This could start with a personal discussion followed by the bank’s field investigation
3.Documentation:
Along with the application form and the credit documents, you may have to pay a processing fee to the bank, which could be 1-2 per cent of the intended loan
An upfront fee could be collected to maintain your loan account records, sending income tax certificates every year, maintaining post-dated cheques, etc.
When you go for a personal discussion, carry all the original documents pertaining to the information provided on the application form. Do not submit any forged documents or lie about the financial details requested.
4.Sanctioning of the loan
At this stage, the bank has checked your financial credentials based on criteria such as your income, age, qualifications, experience, employer, nature of business (if self employed), etc. They work out the maximum loan eligibility, and an indicative loan amount that the bank is willing to offer.
5.Valuation and legal check:
Valuation and legal check on property and papers is the next stage where the focus of the bank will shift to the property that you intend to mortgage Meanwhile, bank verifies your personal and employment details. The bank also does a valuation of the property
6.Offer letter/Sanction letter:
The bank now sends you an offer letter with details relevant to the loan. If these terms and conditions are acceptable to you, you can sign an acceptance copy
