When it comes to seeking finance for high-value funding needs, loan against property surfaces as one of the most sought-after funding options. The fact that it can be availed against both residential and commercial property makes it accessible to a wider borrower base. Other attractive benefits like lower interest rates as against unsecured loans have far outweighed the benefits of these mortgage loans in the long-term financing context.
One must, however, remember that as a long term brings flexibility, it also creates a significant financial commitment for the borrower in the coming decade or more. You must thus be well aware of what it comprises and other crucial information related to the loan before applying. Below are outlined the most crucial aspects related to a property loan that you should know about.
Top Features and Benefits of a Loan Against Property
- Secured, mortgage-based loan: The loan is a secured financing option funded against collateral. However, the collateral is agreed on as a mortgage security, wherein only fixed assets are allowed as security. As a secured loan, it is also easily available to property owners across the country.
- High financing value: Depending on the mortgaged property’s current market value, the maximum loan amount provided by a lender can be remarkably high. Eligible candidates can thus fulfil their big-ticket financing needs conveniently by opting for the mortgage loan.
- Restriction-free end-use: Unlike many other customised funding options, a loan against property is also a funding option that comes with zero end-use restriction. You can thus use the loan amount to address both personal and professional funding needs.
- Availability for both self-employed and salaried class: Individuals across all income earning classes can avail a loan against property, including salaried and self-employed persons, if they own a property suitable for mortgage.
- Several properties acceptable as mortgage: Lenders accept different types of properties as mortgage to provide loan against property financing, including residential property, commercial property, and land. Thus, whether you own a self-occupied/rented residential property of a commercial property like shop, office space, etc., you can easily avail the advance.
- Selective tax benefits: Usage of the loan amount also comes with tax benefits on interest paid. For instance, if you have used the loan amount for home construction or renovation. An annual deduction of up to Rs.1.5 lakh is available towards interest payment.
- Long and flexible repayment tenure: You can also enjoy affordable repayment of the loan amount in easy EMIs with suitable tenure selection. Lenders provide an extended tenure of up to 15 years for repayment convenience of borrowers.
- High LTV: Lenders also provide a high LTV on loan against property to help individual’s maximise funding leveraged through their properties’ underlying equity. LTV or loan to value ratio is the maximum percentage of property’s value a lender is ready to extend as a loan.
Eligibility and Document requirements for a Property Loan
The eligibility and document requirements for a property loan are simple. Check them out below.
- Applicant needs to be within an age range specified by the selected lender.
- He/she must be a salaried or self-employed individual with minimum experience as required.
- Applicant must also own a property eligible for mortgage.
- He/she must be earning minimum monthly income to apply.
The documents required usually include –
- KYC documents, comprising identity and address proofs.
- Income and employment proofs like salary slips, financial statements, ITR, bank account statements, etc.
- Documents of property ownership, like allotment letter, sale deed, etc.
Steps to Apply for a Property Loan
You can apply for a property loan both offline and online as per your suitability. To apply offline, visit your selected lender’s nearest branch with necessary documents. Fill in the application form and submit along with paperwork to apply.
However, online applications are usually more streamlined, requiring minimum paperwork and enabling loan initiation from the comfort of your home. You can follow the steps given below to apply for the loan online.
- Visit your lender’s official website and navigate to the application form.
- Next, fill in the required personal, professional, and financial details.
- Attach a soft copy each of the required documents and submit.
Once applied online, you can also track your loan against property application for the stage of processing. While applying, you can also negotiate with the lender to avail the most affordable financing option at favourable terms. It is best to apply for the loan with a high credit score for improved chances of quick loan approval.
After submitting your documents, your lender will send a field officer to visit the site to verify the property. And issue a property evaluation report that includes an estimated market worth. They will also confirm that the property has a clear title and no legal obligations. Based on the aforesaid assessment, the lender will finalise your loan amount. After which, they will disburse the loan amount into your account.