In the present-day credit market, one of the most attractive options for availing credit is taking a loan against property. This is the process where you can pledge your property and obtain a loan against the same. People prefer to avail of a loan against property as it does not come with any terms of usage and spending the funds for different purposes. The borrowers generally use this long term loan for purposes which require a lump sum amount of money and are huge in nature. Some of the examples are weddings of children, educational requirements etc.
Here is a summary of the general rates and conditions related to loans against property in the market
upto 25 crores
upto 20 years
1%-3% plus the GST
Some of the important things to be kept in mind before availing of the loan are
- The property should be legally approved and all sanctions from the government are required to be completed.
- The income source and the credit score of the applicant should be up to the mark and thus the application process is strict.
- The repayment tenures of these loans are very flexible and thus one can enjoy the property if EMIs are paid in a timely manner. The borrower can also sell the property if the loan cannot be repaid.
- It is possible to pre-close your loan against the property. Some charges will be laid if the borrower wishes to foreclose the loan.
- In the case of a loan against property, the property can be given for rent and the rental income can be earned by the borrower.
- If the borrower is a salaried person, they can enjoy the tax deduction under section 24. The condition being the loan should be utilized for a new house.
- Section 37 of the Income Tax Act, 1961 allows you to claim expenses as a tax deduction if they are used for the purpose of business.
- The borrower cannot claim any tax benefits if the loan is used for marriages or paying medical expenses and education.
Factors that have an impact on Loan against property
- The repayment tenure determines the interest rate being charged by the banks. The longer the tenure the lower the interest rate and the shorter the tenure the higher the interest rate.
- The credit score of an individual should be 700 and above for availing of a cheaper interest rate for a loan against property.
- The type of property will determine the interest rate and the whole conditions of the loan.
- The age, occupation and interest rate also determine the loan and the terms and conditions for it.
Leading banks offering Loan Against Property are
- Offered to customers with residential and commercial properties
- The minimum and maximum loan amounts are Rs. 10 lakhs and Rs. 7.5 crores
- The processing fee is 1% plus the service tax and the maximum is Rs. 50,000 plus the service tax
- The income requirements are Rs. 25,000 for salaried persons and Rs. 3 lakhs for a business owner
- The bank does not have any prepayment penalties for loans against property.
- The applicant should be a resident of the country
- The loan has flexible tenures up to 15 years
- The documentation process is quick and hassle-free
- Salaried and self-employed individuals are eligible for this loan.
- The loan amount is up to Rs. 7 crores
- The loan can be availed up to 80% of the value of property
- Flexible loan tenures
- Salaried or self-employed individuals are entitled for this loan
- Loans starting at Rs. 5 lakhs
- Overdraft facility is available
- Loan transfers are available
- The loan tenure is flexible and the interest rates are also competitive
- Quick documentation process
- Pre-qualified top-up loan
- Wide range of collaterals
- Overdraft facility is available
- Competitive rates and flexible plans
- Minimum documentation required
- Quick loan approval
- Flexible repayment options
- Doorstep banking is available
Kotak Mahindra Bank
- Residential or commercial property as collateral
- Flexible eligibility criteria
- Hassle-free application process
- Interest rates are lower than the products available in the market
- Loan can be availed for purposes like education, travel and personal expenses
- Quick online application process
- Loan amount at the discretion of the bank
- Minimum documentation is required
- Flexible tenure options
- Competitive rates than the market
Eligibility Criteria for Loan Against Property
- The property that is pledged as collateral should be present in India
- The minimum and maximum age is 25 and 65 years
- The type of employment is salaried or self-employed
- The minimum monthly income should be Rs. 25,000
- All the documents related to property should be proper and up to date
Documents Required for Application
- A valid proof of identity that is a voter card, PAN card, Adhar card or a passport can be given
- A proof of address that is passport, electricity bill, Adhar card can be given
- Property documents related to purchase and ownership of property is required
- Any income proof such as salary slips, form 16 or Certificate of Practice can be given.
The loan against property is an option that can be easily availed by individuals and businesses. This loan can be availed at competitive rates and thus the loan tenure options can also be flexible with every lender.
Individuals or businesses have to collate and keep all the records related to properties updated for the ease of availing of this loan.