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​Detailed Guide on Loan Against Property

​Detailed Guide on Loan Against Property 

You require opting for finances throughout your life for various purposes, may it be planning out your wedding, investing in your business ideas, or closing a medical requirement. Here’s where you can opt for an SBI loan against property or HDFC loan against propertyor a loan against property from any other lender. Note that a loan against property serves as an excellent asset and the security against this can get your loan proceeds as per your requirement. As a loan against property is a kind of secured loan proceeds, the rate of interest is not just lower but even has higher approval chances. A loan against property scheme even called a mortgage loan is where various parameters like your loan repayment tenure, credit score, property type and your credit profile are analysed by the lender to decide your loan against property rate of interest. However, what exactly is the rate of interest on a loan against property? How can you check out your eligibility for a loan against property? Covered here is all you must know about a loan against property. Read on to know. 

Benefits and features of loan against property –

When you place an application for a loan against property, you can avail it at a lower rate of interest of between 8 per cent per annum and 25 per cent per annum. You can avail up to twenty years of maximum repayment tenure for the loan against the property option. And the loan proceeds that can be disbursed can be as high as Rs 25 crore. The processing charges are generally anywhere between 1 per cent and 3 per cent of the loan proceeds, excluding the GST on it. Now, let’s take a look at the important features and benefits​ of a​ loan against property. 

Also Check: HDFC Loan Against Property

Hassle-free and stress-free documentation as well as approval process – 

Real estate in form of buildings or land has asset value and thus getting a secure loan is less stressful than an unsecured loan. The ownership documents of the land or property serve as security or collateral in this scenario and thus permits you a quick and easy approval. 

Lower rate of interest on loan against property – 

Secured loans like loans against property generally have lower interest rates than unsecured loan options. The chances of you availing a loan particularly if you hold a strong credit score and profile are extremely high. 

Retained ownership of assets – 

In the case, you are thinking that if you would be handing over your property’s ownership, ensure to be at peace that you will not require doing so. Offering the property as security does not infer the ownership would change hands. You are permitted to make the property sale if you are facing trouble in repaying your loan proceeds. 

Flexible repayment choices – 

Depending on the financial institution from whom you want to take up the loan, you can simply select from a vast variety of flexible tenures for a maximum period of 20 years. 

Potential to pre-close –

You can select to opt for the pre-closure option for your loan against the property. For instance, if the loan against property has a variable interest rate option, then you can close this loan without the need for making the payment of the loan penalties. You might, however, require paying a small amount in the case your loan against the property option is availed at a fixed interest rate.

Checking out loan against property’s eligibility – 

Availing a loan is a major step in life. You require to ensure you have performed the necessary research to ensure your loan against property eligibility and review the apt income level to make the repayment of the loan EMI. For example, you cannot avail a loan against property with zero income proof. Mentioned here are some of the important criteria you must be well-versed with before opting for a loan against the property option. 

Salaried – 

A salaried individual opting for a loan must have the listed criteria in place – 

∙       Anywhere between the age of 18 and 60 years

∙       Must be an Indian citizen

∙       Must be a graduate

∙       Must be employed with a public, private, multinational or government firm

∙       Must have a monthly income equalingRs 40,000 or above

Nonprofessionals or self-employed – 

Any non-professional or self-employed individual must have the following eligibility parameters – 

∙       Must hold a minimum age of 21 years when applying for the loan against property. 

∙       Must not be over the age of 65 years before loan maturity time.

∙       Must be the owner of a business organisation or company operational for at least three years.

What are the important documents to avail loan against property?

It is best you stay prepared with the required documents to get the loan against property option. Mentioned here are the important document, you must keep handy to avail the loan against property. 

∙       Application form

∙       KYC documents of individuals involving identity proof, PAN card, ownership proof, address proof, etc. 

Salaried – 

∙       Income slips of the past three months

∙       Form 16

∙       Bank statements of the past six months to show your prevailing income and EMI repayments

Non-professionals or self-employed –

∙       Business proof continuity with any document involving tax registration as per VAT, Shop and Establishment certificate, GST registration, Service Tax, etc. 

∙       Proof of constitution with any documents involving Form 32, Partnership Deed, AOA, MOA, GST Registration Certificate, etc. 

∙       Audited financials for the last three years. 

∙       Most current GST, VAT returns, and Service Tax for the current financial year.

Determining the loan against the property’s duration – 

While the rate of interest and loan EMIs are important parameters to consider, you should even have a clear idea regarding the loan repayment tenure as it impacts your borrowing cost. In the case you check the online loan against the property calculator, then you will find that if you opt for a higher repayment tenure then while your loan EMI would be lower, your overall interest constituent outgo would be higher. So, ensure to go for the tenure as per your repayment capacity and do not opt for the highest tenure unnecessarily as this would make you incur a higher overall loan cost. 

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