Finance

Here Are The Essentials Of A Loan Against Property – Why Should You Go For It Now?   

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The credit industry in India is filled with different types of lucrative options. Here, a particular type of secured loan called a loan against property attracts borrowers due to secured and advantageous features. This financial product allows individuals to borrow a large sum of money and use it as per their requirements. Further, the speedy approval and minimal documentation thrust borrowers more towards loans against property. Here, individuals can find out about every aspect of a loan against property. 

Features and benefits of loan against property

The features and benefits of availing loan against property are discussed below.

  • Secured loan

A loan against property is a secured loan, meaning individuals can make money by pledging or mortgaging their immovable asset (residential or commercial property). The presence of collateral thus helps to lower default risk for lending institutions.

  • Easy loan approval process

The loan approval process in the case of a loan against property is simpler than other available loan options. Due to its secured nature, lending institutions sanction the loan after verifying the legal status of the property and whether it is free of disputes or not. Faster approval and loan disbursal helps individuals meet urgent cash crunch efficiently. 

  • Lower interest on loans against property

A loan against property comes with a lower interest rate. The secured nature of loans against property allows lending institutions to set reduced rates than other unsecured financial products. Individuals with a decent CIBIL Score and credit profile can easily get a loan against property at a reduced rate and lower the total cost of borrowing. 

Also Read: Uses of Short Term Loans and Why They Are A Great Thin

  • Flexible repayment tenor

One of the major advantages of a loan against property is the longer tenor. Usually, loans against property have 10-15 years of a tenor. The longer tenor helps to lower monthly payables, i.e., EMI, and reduce the monthly financial burden and vice versa. Here, borrowers must know that a longer tenor also increases interest outgo, further stretching the loan amount. By using a loan against property EMI calculator, individuals can try various combinations of tenor and select a suitable EMI.  

  • High loan amount

A loan against property is given to individuals on the basis of the market value of the property and the loan-to-value ratio. The market value of a property depends on its location, age, and usage of a property. A loan-to-value ratio is the percentage of the property value that lenders offer borrowers as a loan amount. 

In the case of a loan against property, individuals get 60% – 70% of the property’s value as a loan amount. A higher LTV helps to fetch a larger loan amount, which individuals can use to fund a child’s education, marriage or even consolidate debts. Several lending institutions offer high-value loans against property at competitive rates. 

These financial institutions also extend a pre-approved offer that simplifies the loan availing process. These offers are also applicable to other financial products such as home loans, loans against property etc. Individuals can check their loans against property by entering names and contact details.    

As the features and benefits are clear to individuals, they must focus on other essentials of loan against property, i.e., documents required and eligibility criteria.   

Documents required for availing loan against property

Here is a list of documents required for a property loan.

For salaried individuals 

  • ID proof of all applicant
  • Address proof of all applicant
  • PAN card/Form 60 of all applicant 
  • Latest salary slips
  • Bank account statements for the last 3 months
  • IT returns
  • Copy of the documents of the property to be mortgaged
  • Title documents as required by the legal team
  • Any other documents, as per requirement

For self-employed individuals

  • Address proof of all applicants   
  • ID proof of all applicant
  • PAN card/Form 60 of all applicant
  • Primary bank account statements for the last 6 months
  • Income documents, such as ITR/Financial, etc.
  • Copy of the documents of the property to be mortgaged
  • Title documents as required by a legal team
  • Any other documents as per requirement 

Eligibility criteria of loan against property

The eligibility criteria for individuals with different employment statuses are discussed below.

For salaried individuals 

  • The applicant’s age should be between 28 to 58 years
  • Applicants must be salaried employees in a private or public sector company or a multinational organisation

For self-employed individuals

  • The applicant’s age must be between 25 and 70 years of age
  • Applicants must be able to show steady income from their business

By fulfilling the eligibility parameters mentioned above, individuals can enjoy the features and benefits of a loan against property. However, they can ensure further benefits if they apply it now. 

Advantage of opting loan against property now

The Reserve Bank of India has kept the repo rate unchanged at 4%. Low repo rate results in low-cost loans meaning consumers can get lesser interest rates on loans against property and reduced EMI as well.

With a clear knowledge of the essentials of a loan against property and the benefits of availing at the present market scenario, individuals can secure maximum advantages from this financial product.

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