FREQUENTLY ASKED QUESTIONS RELATED TO LOAN AGAINST PROPERTY

  • Can NRIs take the Loan against Property?

NRIs can definitely take a Loan against Property. If an NRI owns commercial or residential property in their name they can very well borrow against that property. The process for getting loan against property is almost the same for Indian citizens as well as NRIs. Many lending agencies are offering loan against property to NRIs at lucrative interest rates and least documentation.

  • What is meant by market value of a property?

The amount a person receives by selling their property under present conditions is known as market value of a property. Stamp duty is paid according to the market value or agreement value of the property whichever is higher. The market value of an asset is liable to fluctuations. It represents what a buyer is willing to pay for a property and not its actual worth. 

  • Can the money obtained for Loan against Property be used for business purposes?

You can surely use the money for your business purposes or even personal activities. However, ensure you don’t use the money for any illegal acts. Sometimes mortgage loan is taken to meet wedding or education needs or even to purchase/build a property. However, most mortgage loans are taken for business purposes. And when there is a need for emergency funds at reasonable interest rates, then why not avail it.

  • Can only residential properties be used for Mortgage Loan?

Not exactly, you can avail the loan by mortgaging either your commercial or residential property. It could be rented or self-occupied property, which means it could be a plot of land or a house. Most banks welcome commercial as well as residential properties for mortgage.

  • Can the Loan against Property be prepaid?

Loan against property is the most flexible type of loan because the end use is totally as per your wish. The principal as well as the interest amount can be prepaid before the end of the loan period. After paying a certain number of EMIs you are free to foreclose your loan. That means you can repay the entire loan amount if your pocket permits. You will not have to pay the interest part of your loan, so you can save a lot this way.

  • Which bank is best for Loan against Property?

Due to its low interest rates, Citibank is considered one of the best banks for mortgage loan. However, there are many other banks also offering lucrative interest rates for loan against property.

The listed below banks are some of the more well known offering loans against property:

  • HDFC Bank
  • Edelweiss Financial Services Ltd
  • Aditya Birla Finance Ltd
  • Fullerton India Credit Company Ltd
  • Indiabulls
  • Capital First
  • HDB Financial Services Ltd
  • DHFL
  • What are the different charges for Mortgage Loan ?

Following are some of the charges the bank imposes, apart from mortgage interest rates:

  1. Processing fee: This fee is slapped during application for the loan. However, you can reduce it through negotiations.
  2. Foreclosure fee: Though not all banks, but some banks do charge a foreclosure fee.  In the event you wish to close the loan before the end of its validity you will have to pay this fee.
  • How should you select a bank for Loan against Property?

 

Before deciding on your lending bank, you need to go through many aspects of the said banks. You should check to see if you can meet the criteria for the amount you require. Next, check and see their rate of interest, processing fee and other charges. Also look up their quality of service. This is very important to get you comfortable to seek a loan from their bank.

 

  • Is the CIBIL score important for Loan against Property?

CIBIL score is one of the most important things while taking a mortgage loan. It shows your track record of repayments. The score should be at least 750 if not more while applying for a loan. 350 – 750 is an average score which could be unacceptable, but below 350 is likely to lead to rejection of your loan.  A poor CIBIL score can be a detriment to availing a loan. So, you must ensure you maintain an excellent CIBIL score by making timely payments. 

  • Can I be eligible for the Loan against property even with a bad CIBIL score?

Most applicants return disappointed at not having secured a loan due to a poor CIBIL score. However, to meet this deficiency, Bajaj Finserv offers mortgage loan for individuals with a poor CIBIL score. 

It is possible for you to obtain a loan with a low CIBIL score. However, you must be ready to pay a higher rate of interest.

INTEREST RATES AND OFFERS OF VARIOUS BANKS FOR PROPERTY LOANS:

While applying for a loan, the one thing that we all think about is the rate of interest. It is the greatest aspect of concern. Almost all the top banks out there, are offering home loans and various other property loans at present, at the rate of 8.70% per annum. Thus it can be quite a bemusing task to choose which bank to choose. But for applying for a property loans, you must choose the bank wisely.

However, you can try comparing amongst various banks. And, you can compare which bank is providing the highest amount of loans as per your eligibility criteria.

So, for ease, here we have added a list stating which banks offer what interest rates for a particular amount.

PROPERTY LOAN

Source: https://www.bankbazaar.com/home-loan-interest-rate.html

The above list shows the interest rates and the processing fees for several top and renowned banks. You can have a look at the above list in order to decide the most suitable bank for you as per your requirements and profile. Kreditdeals is a great financial company and you can consider this company for helping you with various purposes such as investments plans, loans etc. You need to remember that, property loans or housing loans are on the basis of the eligibility criteria for a home loan as well as the property. Some important factors are property value, age of the person, income or the salary, etc. The better the overall profile, the higher is the chance to get the lowest rates of interest.

Why choose the right bank?

You can apply for a loan against property and get the best rates if you are able to choose the right bank or source. Also, there are two types of interest rate, namely, fixed interest rates, and floating interest rates. If you are applying for fixed interest rates, the rate of interest is fixed and you know the changes you are paying. This will help you save money in the long as there would be no late fluctuations. On the other hand, in case of floating rates, the most visible perk is that you have benefit to be boiled, based on the latest rates. If the rate of interest falls, you can save your changes of interest.

You can choose the type rate of interest according to your convenience. Both the types have their respective advantages and disadvantages. So, you need to take the decision wisely.

Mortgage Loan

Loan against property is when you offer your residential or business property as security to avail a loan. And that’s why it is also known as a secured loan. In this case your loan is dependent upon the value of the property you have kept as collateral. The other name for loan against property is mortgage loan against property.  Anybody, whether salaried or self-employed can avail this loan to meet their specific needs.

Loans are sought for several reasons and not always for the purpose of purchasing property. You will have to sign an undertaking stating the use for which the loan against property is being taken. The bank will regularly monitor the same.

As a child reaches the end of their school career, parents become concerned about their further education. Every parent has a dream for their child to be established in life. Loans against mortgage are very helpful to meet this huge need in a parent’s life. They can confidently send their child overseas or even continue locally with the desired education. 

Sometimes, a young adult may get a job offer abroad and settling down can be extremely costly. Why worry; the option of a loan against property is always there. 

A property loan is so useful for even establishing a start-up business. With opportunities galore, youngsters are taking the plunge to open their own businesses. A mortgage loan comes handy at these times. 

A wedding is one of the most important events in a person’s life. Parents want to give their child the most memorable day of their life. But what does one do if they cannot afford it. They need not lose heart. They can mortgage their property and avail a decent loan to meet the wedding needs.

Unforeseen medical expenses are not to be left behind. What does one do when a medical crisis rears its ugly head? Some people don’t have ready cash or even a proper bank balance at hand. However, a mortgage loan can be taken to meet their crucial need for surgery and hospitalization. 

Therefore, we can safely say a loan against property meets almost all the needs of an individual.  

Types Of Mortgage Loan/Loan Against Property

Mortgage Loan scheme is a secured personal loan. You can easily obtain by pledging your property as collateral or security. Since you are pledging your property, the rate of interest will be much lower for you as compared to personal loans. Also, these types of loans are known as Loan against property.

You can mortgage any property for the availing of a property loan. Starting from personal residents, commercial properties, or a piece of land, you can pledge anything. Also, this is a secured loan, having a longer tenure.

To help you with a better understanding of the types of loan against property, here some Loan Against Property are discussed:

Loan Against Property for Debt Consolidation:

This property loan for debt consolidation allows the borrowers to consolidate multiple debts easily and save more money on EMIs. Kreditdeals is a renowned financial company that provides such loans, investment plans, business cards, etc. It also ensures competitive interest rates and flexible tenure for easy loan repayments.

Mortgage Loan Balance Transfer:

The type of loan gives you the facility to transfer your existing debt with some higher interests. As a matter of fact, you can get benefits like affordable rates of interest, fast loan disbursal, etc.

You can also get high-value top-up loans, payment by parts facility, nil foreclosure and many more.

Lease Rental Discounting:

This is one of the most popular mortgage loan types. This loan type allows you to obtain a loan against rentals.

If you earn some fixed rentals at some definite intervals from any of your property, you can go for a Lease rental discounting loan against these rentals.

Some other factors about the LAP that you might like to know are:

  • You can obtain up to 90% of the total LAP as an overdraft.
  • The bank will assess the number of loans based on your income financials.
  • Also, the bank can also assess the loan on the basis of the value of the property.

Also, there are various advantages of availing LAPS. Since you will be mortgaging your property, you will get a number of facilities like lower rates of interest, longer tenures, etc.

DIFFERENCE BETWEEN PERSONAL LOAN AND PROPERTY LOAN:

When you are going to apply for a loan, you must be aware of all the aspects of the type of loans. This will help you choose the right type of loans, that best suits your requirements and profile.

Personal loan and loan against property are the two most popularly used ones. There are some basic differences between a personal loan and property loan.

The differences betwen these two type of loans are:

Let us first talk about ‘personal loan’:

What is a personal loan?

Personal loan is an unsecured type of loan. You can raise a personal loan from a bank for any of your personal use. There is no restriction on the proceeds of the amount of loan. You can use such personal loans for various purposes like paying off your debts, build or renovate a house, setting up a business and also for affording the expenses of any wedding.

What is a property loan?

A property loan is a secured type of loan. You can take a property loan by mortgaging any of your personal property. It can be personal property, a piece of land, and commercial property. 

In the case of property loans, also there are no restrictions on the proceeds, just like the property loans. You can use such loans for financing your child’s education, a wedding, constructing a house, meeting medical expenses and to buy a vehicle and also for financing your own business.

How to choose between the two?

The processing time of these two type of loans: 

You achieve a LAP by mortgaging a property, you have to verify some related documents before you disburse the loan. You also need to undertake some technical studies to confirm ownership. Also, you may need to submit documents supporting your income. 

Interest rates:

The interest rates of the Loan against properties are usually lower than the personal loans. The rates can be anywhere between 11% to 16%. While the rates of interest of personal loans can be somewhere around 24%.

Tenure of the loan: 

In the case of a property loan, the tenure can be around 15 years, while the upper limit of the tenure of personal loans is 5 years. The longer the tenure, the lesser is the EMI payouts. This eventually enhances the affordability of big-ticket loans. But, longer tenure can also result in higher interest payouts.

The credit score of the borrower mainly decides these factors.

MORTGAGE LOAN PROCESS:

If you are applying for a property loan for the first time, you might find the entire Mortgage Loan process a bit confusing. You may face difficulties while going for a loan application. The eligibility criteria, the documents required and the step by step process for applying for the loan can be quite baffling.

For getting a thorough, detailed, in-depth understanding of the whole process of applying for a loan against property, you refer to the underwritten guide: we have added some key aspects to make you gain a better understanding of the entire process:

  • The pre-approval Mortgage Loan process:

The lender will review the financial situation of yours to determine how much they will be willing to pay. They will pay you the loan amount according to your present financial status. The better your financial, the more amount you can expect from your lender.

  •   House hunting and offer:

The buyer of a home locates a home and negotiates the price. Also, he signs a purchase agreement. Actually, this is a very important step in the loan applying process.

  •     Loan application:

Then, in the next step, you fill-up form, applying for the desired amount of loan against the desired property. Also, you need to provide all the important pieces of information about your property. As a matter of fact, you need to be precise regarding all the documents and papers.

  •  Mortgaging process:

Then, in the next process, your loan processor will gather all the information required for the loan and will create a file. This file will be consisting of all the important pieces of information.

  • Mortgage underwriting:

In the next step, the underwriter will analyze the file of the loan. As a matter of fact, the pieces of information will play a great role in this step. This step will determine whether your application for the loan should be approved or denied.

  • Approval and closing of Mortgage Loan process:

This is the last and the final step of the whole Mortgage Loan process. The underwriter will issue a final approval and the buyer of the home will attend the closing in order to finalize the deal.

ELIGIBILITY CRITERIA AND THE DOCUMENTS REQUIRED FOR PROPERTY LOANS:

When applying for a loan, the most important thing that strikes the mind is the eligibility criteria for property loans and the necessary documents required for that. Sometimes, when your finances are stained and when you need help to tie over, you can leverage your assets for borrowing money. This is quite a favorable option in comparison with many other unsecured forms. Also, n such cases, the loan against property can come handy. Since you are offering collateral for the loan, one can get a higher amount of loan. Also, the tenure of a property loan is much longer than that of an unsecured or personal loan.

The eligibility criteria for property loans may vary from bank to bank. But there are some basic criteria and these always remain the same.

Some important documents for property loans are:

Various identity proofs like,

  • PAN card
  • Passport
  • Driving License
  • Voter’s ID
  • Employee ID
  • Bank passbook
  • Ration card

Proof of address like,

  • Passport
  • Utility bill
  • Letter from Any public authority verifying the residential address of the customers.
  • Bank passbook or the account statement of the bank.
  • Voter’s ID
  • Ration card
  • LIC policy/ receipt

Apart from these, you will also need a copy of the document of the property you want to mortgage and IT returns. On the other hand, if you are salaried, you will also the last salary slips and the bank’s statement for the previous 6 months. Also, if you have an existing loan, you will need to submit a sanction letter and a track record of payment of that loan. And, if you have any investment, then you will also need to show the documents and fixed deposits, assets, fixed assets, etc.

Other than these, you may also require to show the sales deed/copy of the agreement, the latest maintenance bill, and your share certificate.

If you are salaried, some other eligibility criteria for property loans that you must meet in order to sanction a loan against property are:
  1. Your age should be between 33 to 58
  2. You should be a salaried employee in any MNC, Pvt. The company, or PSU.
  3. You must be an Indian resident.

On the other hand, if you are self-employed, the eligibility criteria for you would be:

  1. Your age should be between 25 to 70 years.
  2. You should be self-employed with a regular source of income
  3. You should be an Indian resident.

For applying for a property loan, you must meet eligibility and should be able to cite all the necessary documents.

WHAT IS LOAN AGAINST PROPERTY AND TYPES OF IT

A loan is a great thing and it plays a pioneering role in those people’s lives who cannot afford a big amount at a time. A loan refers to borrowing money from somewhere for a definite period and then returning the amount with some interests. Now, loans can be of many times. Various types of loans, Personal loans, property loans, mortgage loans, etc. Here, in this blog, we will be reading about loan against property (LAP). 

There are various types of Mortgage Loan. Some of them are:

  • Residential/Commercial Property loans:

This type of loan is a secured loan as a residential property loan a commercial property loan in order to fund any kind of monetary requirement. The borrowers generally mortgage the property as collateral for availing the loan amounts based on the present market value.

 

  • Property Loan for Self-Employed:

 

The self-employed individuals can avail of some higher amounts ( Rupees in crores) with property loans for self- employed. In order to apply, all you need to do is just to meet the eligibility properties and to apply for the loan by filling a form.

 

· Property Loan for Salaried Employees:

 

The salaried employees out there can opt for a definite amount at a definite competitive rate of interest and use the funds for meeting the diverse expenses such as travel, wedding renovation of various personal properties, medical emergencies. You have to be someone between the age of 33 to 58 years of age and should an Indian resident for applying for this loan.

 

  • · LAP (Mortgage Loan) for Education:

 

You can finance your child’s education by opting for an educational loan against your property. By borrowing up this loan, you can cover your children’s tuition fees, travel, accommodation, etc. You can then repay it through a tenor of your choice. Kreditdeals is a financial company that can provide you with various convenient property loans at a reasonable interest rate.

 

  • · Wedding loan against property:

 

You can go for a wedding your property loan and you can cover all the auspicious events of a wedding such as venue bookings, food expenses, exotic honeymoon plans, etc. Salaried individuals can apply for such a loan for a higher amount as compared to the self-employed ones.

Property loans can be used for a wide variety of purposes. Those purposes could be for covering wedding expenses, education or consolidating debts. This loan is a secured type of loan. You the amount of loan, somewhat equivalent to the value of your property. Also, the interest rates for property loans are also competitive when compared with some unsecured loan types. As discussed above, LAP many purposes for both, individuals and businesses.