Clear All Your Doubts With Our Top 10 FAQs On Loan Against Property
Loan against property is a type of a loan which can be availed by keeping a property as security. Banks and private financial services providers of India are offering loan against property to resolve various kinds of financial crisis. The loan against property, can be either be a residential/commercial building or a piece of land. You have queries regarding loan against property? The top 10 FAQs on loan against property will help you in getting the right fit for your financial crisis.
Need Money?? Have a Property?? Take Loan Against Property
The loan can be availed by mortgaging the property with the bank/private lenders. The loan amount depends on the type of property and in most cases the market value of the property is considered before disbursing the loan, generally commanding about 40% to 60% of the actual market value. However; majority of the people when availing loan against property India are not aware of the procedure and do not have the clarity of the loan commitment. With our top 10 FAQs on loan against property; your majority of the queries has been resolved and you have a better idea of what you are getting into.
Top 10 FAQs On Loan Against Property
Q. 1 How Loan Against Property Is Different From A Home Loan?
Both of these loans are 2 poles apart. When you are buying a new home; it is when home loans are availed. For loan against property you need to put your valuable asset/property/land as a collateral to fix your financial problems. Getting loan against property might be serving various funding purposes like an upcoming wedding, getting funds for your kids for higher education abroad, using it for business expansion, and so on.
Q.2 Is It Okay To Take Personal Loan or a Loan against Property?
It is one of the most commonly asked in FAQs on loan against property. A personal Loan acts like a multi-purpose loan. Personal loan providers of India do not ask for any security or collaterals. If you have a property, you should leverage it for funds. A loan against property scores over a personal loan for the following reasons:
- A Personal Loan is available at steeper interest rates approx 20% when compared to loan against property which is approx 15%.
- A personal loan is available for shorter periods which could be ranging from 1-5 years whereas loan against property is usually available for long tenures of up to 15 years.
- The processing fee is lower for a loan against property which is approx 1% as when you compare with personal loan which is approx 2.5% depending on the bank/private lender you choose.
Q.3 How Much Loan Amount Can I Get Under Loan Against Property?
To get loan against property, you can expect approximately 60-80% of the market value of the property provided as collateral depending upon the bank or the private lender you choose to. The loan amount you can expect depends on the several factors lie Factors like your income, savings, investments, job stability, age, dependents, spouse’s financial health, other loans in your name also play a crucial role in determining the loan amount.
Q.4 Does a bank check my Credit Score before giving me a Loan against Property?
Absolutely Yes. Even though a collateral is provided, banks or the private lenders do check the Credit Score of the applicant as well as the repayment history in case of availing loan against property. If your CIBIL score is over 750; it is considered enough for the loan approval.
In case of a loan against any other asset like shares, valuable assets or gold, the bank would sell the pledged asset to recover its dues. That’s a lower risk to take as compared to losing a home. A loan against property can prove to be a good option for you if you are confident of repaying your dues on time.
Q.5 What If The Property Is Owned By More Than One Person? Is It Possible To Apply For Loan Against Property?
All the co-owners of the property will automatically become joint applicants of the Loan against Property. You can apply jointly with a co-applicant, but the co-applicant must belong to your family. When you are applying jointly, the loan amount can be increased as per your requirements.
Q.6 Can I Make Part-payment or Repay The Loan?
Yes. The loan applicant can pre-pay the loan at any time after 6 months from the date of the disbursement of the loan. However; foreclosure charges applicable. You can make part pre-payments of a minimum amount of Rs 50,000 after 6 months from the loan date. This payment can be made only once in a financial year subject to a maximum of 25%of the balance outstanding against your loan amount at the time of request.
You can repay the loan through post dated cheques or through electronic clearing system (ECS)
Q. 7 Which Types Of Valuables Or Products Can Be Put For Loan Against Property?
- Loan against Property-Residential & Commercial
- Lease Rent Discounting
- Balance Transfer cum Top Up
- Existing Customer Top Up
Q.8 What Are The Eligibility Criteria To Get Loan Against Property?
In majority of the FAQs on loan against property you will find people asking this question; because it is where the applicant miss out to fulfill the criteria. The eligibility criteria to avail a loan against property vary from institution to institution, but most of the basic criteria remain the same. The criteria for majority of the loan against property relate to the profession of the borrower. The loan applicant should be either one of the following to get loan against property.
- Salaried Individual
The minimum age to avail loan should be 24 to 25 years.
The individual should be a permanent employee with the government or a reputed company.
The maximum age of the applicant can be 65 years
The applicant can be a professional in any field such as doctor, engineer, architect, chartered accountant, etc.
- Self-Employed Individual
The individual should be a regular at filing income tax returns.
The individual should have been in the business for a minimum 3 to 5 years
- Property eligibility
The property in question should be free from legal tangles
Should have clear titles registered in the name of the loan applicant
Q.9 Is It Necessary That The Property To Be Insured?
Yes, it is mandatory. The loan applicant will have to ensure that the property is duly and properly insured for fire and other appropriate hazard. The property requires to be duly insured during the tenor of the loan. It requires submitting the proof to the bank each year.
Q.10 What Refers To The Term Floating Rate And Fixed Rate For Loan Against Property?
Floating rate of interest loan against property means the interest charged will keep on changing with respect to the rates in the market. It is perhaps; the most asked question in FAQs on loan against property. Usually the rate of interest charged is based on the cost of funds and the prevailing market rates. Accordingly the tenure increases or decreases the EMIs increases or decreases based on whether the rates move upwards or downwards.
Fixed rate loan against property means the rate of interest charged by the bank is same over the tenure of the loan. It is advisable to go for a fixed rate when the interest prevailing in the market have touched rock bottom and the rates can only move upwards.
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