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There are many situations in our life when we need lump sum amounts of money for immediate personal requirements. Asking for financial help from relatives or friends is the last option we would look into. Getting a personal loan can be expensive with high interest rates. Loan against property is the best option for the people who have commercial or residential property to mortgage and get the required amount as loan from the lender at an affordable rate of interest. There are various purposes when we need lump sum amount, but getting the amount quickly and at affordable rates become difficult. In such situations a mortgage loan can help.
One can avail a mortgage loan against the fully constructed property, commercial & freehold residential properties. So if you are in need of immediate funds and have any of the kind of aforesaid properties then you can go for the loan against property. You can get the loan for various purposes of:
These are few purposes; your purpose may vary, so it is better to consult the lenders before taking the loan and getting your queries cleared. You can apply individually or jointly for the mortgage loan. Depending on the borrower’s financial profile, age of the applicant and the property; the tenure can be stretched up to 15 years. The maximum amount of loan money the applicant would get varies from 50-60% of the mortgaged property’s present price. The interest rate is determined depending on the loan slab, type of interest rate & nature of the property (residential/commercial), which lies between 9.5-11.5%.The processing fee is around 1.5-2% of the loan amount.
It is better to unlock the potential value of your property and use it for your purpose, than getting a personal loan and pay the debt with high interest rates. There are some benefits you get, when you mortgage your property and get a loan:
All you need to submit the required documents for establishing your identity, address, and job and the bank statement reflecting your expenditure habit and loan repayment discipline. Along with basic documents you need to submit the papers of the property you want to mortgage and proof of no encumbrances on the property are required to be submitted. After getting the loan; repay the amount as soon as possible.Avoid skipping your repayment installments, because it will not only hamper your credit score but may risk your mortgaged property.
There are some turns in our lives, which calls for financial attention. Your child’s marriage is one such turn, our Indian families are abided by traditions and they consider their child’s marriage to be one of the biggest responsibilities along with their health & education. During such occasions, you need a lump sum amount to arrange a grand function for your child’s marriage. On such instances unlocking the potential value of your property by mortgaging it can serve your purpose. The financers offer you loan against property and give you the required amount depending on the present market value of the concerned property. You can mortgage your residential or commercial property, to get the required amount.
If you would go for a personal loan for the purpose, then chances are there that you may end up paying high interest cost for a short period of time. If you opt for a mortgage loan then you can enjoy following benefits:
Depending on the loan amount slab the rate of interest is determined, which varies from 10-13%, for 15years. Affordable interest rates and long repayment terms make the mortgage loan a handy option for immediate fund requirement.
To take the mortgage loan for your child’s marriage, start planning beforehand, so that you get the required amount in time. Go through the online aggregator sites and compare:
If you select your financer after comparing the aforesaid elements, then you can get a good financer, who can help you to serve your purpose. In order to lessen the EMI cost, never stretch your loan tenure, because it may reduce the EMI figure but it increases the interest cost. Make use of the EMI calculator available in the aggregator site or in the financer’s web-page and get an idea of basic debt fund structure and adjust your expenses accordingly. When you are taking the money for your child’s marriage, chances are there that you are closer to your retirement phase, so planning is very necessary, a single mistake can over burden you with debt.
Getting the loan against property is easier and quicker, but the repayment of the debt can be exhaustive so make sure that you take the required amount only and your monthly income source can easily absorb the EMI cost so that you can easily repay your debt. Though you are mortgaging your property to serve a particular purpose, but don’t risk it by being a defaulter. Check your financial profile & affordability before taking the loan against property.
A loan against home, also known as loan against property or mortgage is a great way to meet any of your dire funding requirements. A loan against property is also one of the most common borrowing instruments among borrowers. This is because of the quick approvals, minimal documentation and convenient repayment options available on these kinds of loans. That said, loan against property is a good option, but before you opt for one, here are some points to remember.
First and foremost, the interest rate:
The interest rates for loan against home range between 10 and 14 percent. This is a little higher than normal home loans or education loans. So it’s advisable to opt for a loan against property only and only when you require funds for a purpose other than education or home renovation. Because even a percent or two less and you could end up saving a considerable amount in the interest you pay. So only opt for a loan against property when not able to receive a loan specific to the purpose you need the funds for.
With a loan against home, you stand to receive anything between 40 and 70 percent of the market value of your home as the loan amount. This can go up to several crores of rupees depending on the value of your house. Keeping this in mind, it’s wise to opt for loan against property only when the market value of your home is high and other borrowing instruments don’t provide you with adequate fund for your needs. Also, with loan against property, it’s not advisable for small loanamounts as it doesn’t make sense putting your home on the line for a small amount. Only when the financial need is very large you should go in for this kind of loan.
When it comes to tenure, loan against home has an edge over other borrowing instruments. Tenures for loan against property can go as high as 15 years, which is much more thana personal loan. This also means you have more time to pay a smaller EMI. If you take out a personal loan, you will have a shorter loan tenure and larger EMI; this could put a strain on your income source and upset your financial standings, whereas loan against property affords you the luxury of a smaller EMI that can be paid over longer periods of time. The only catch is point one, higher interest rates, which mean you pay more in terms of interest.
Unlike other borrowing instruments such as educational loan or home loan, the loan against home doesn’t provide much in terms of tax deductions on EMIs. However, if you take out a loan against property for business reasons then the borrower may apply for tax deduction on interest paid. But for this, the loan taken must be used for expansion of business and there should be some proof to support this claim.
Just like all other loans, the loan against home also invites a processing fee. Most banks charge one percent of the loan amount as a processing fee, but non-banking financial institutes can charge you up to two percent of your loan amount as processing charge. So whilst opting for a loan against property it’s wise to compare these costs as well whilst comparing all other variables before fixing on a particular lender.
All-in-all, a loan against home is the best way to get your hands on a large chunk of money for any other purpose besides home renovation and education. It is a great way to arrive at funds to expand the business and if you’re thinking about one, you should definitely go over the above points with the sales representative of your lender.
It’s an age-old concept that your property is said to be the best investment that will reap you benefits whether you stay in it, rent it or sell it after a couple of years. However, another golden corner of modern times of owning suitable property is to take a loan against property. People need to fulfill wishes or responsibilities at every stage of life. It could be taking the first step of your new business or children education or daughter’s marriage expenses. The needs and demands are never complete. Borrowing finance from traditional financiers would be a cumbersome job. Besides incurring hefty interest rates on the loan, they have stringent payment measures and lesser time for loan repayments.
Therefore, many banks and finance companies in India have introduced a unique and most beneficial way of taking a loan against property to finance your dreams. These loans come at a fairly low-interest rate, flexible repayment tenure and ample amount of time for repayments.
If you’re wondering how to apply for loan against property, the amount you get qualified for then here are few answer to address your concern
The loan amount depends upon your age, maturity age of the property, area and the market value. After examining these factors banks or NBFC will quote a value to offer you as a loan. They have interest rates like fixed or floating, semi fixed & floating rates. So, based on your income source and risk appetite you can take the loan amount and set your interest rates.
While applying for a loan against property its important you maintain a good credit score. If you fail to do so you might get higher interest rates or the loan application might get rejected as well. So, its better you make all your payments regarding other debts, credit cards on time to maintain an extremely good credit score and qualify for the best deals.
The market value of your property makes a huge difference in qualify amount. The loan amount is based on the current market value. So, if it’s dipping you will get lesser loan amount alternatively if its rising you has the advantage of taking a top-up loan as well.
These loans can be applied for by an individual, either solely or jointly (in most cases spouse). The most important part is that most people think property mortgage means handing over the property to the bank or private finance companies. However, it’s a big misconception. Even though you take a loan against property, you still enjoy the occupancy of your property. It’s only in dire conditions that if you’re unable to make repayments that you will have to handover the property to the bank or finance firm.
While the loans are available at a relatively lesser interest rate of around 10 to 12% the repayment tenure for such loan varies from around 10 to 15 years based on the bank or finance firm you wish to take a loan and your existing relationship with them. For a better understanding of documentation & fee structure, you can always visit the relevant site and make sure the mandatory documents are available at the earliest for the application.
To apply for a loan against property you can visit the website of desired bank or finance firm, fill up the application form, attached scanned copy of documents and hit the apply button. Within a couple of days, you’ll be informed about the loan status via phone or email. Thus, at the touch of the button on your smartphones, laptops or computers you can arrange finance to turn your dreams into reality.
The phrase ‘life is a roller-coaster’ is quite true. No one can predict its ups & downs or its twists & turns, we’re just all in for the ride! And when life throws us a curve, we often tend to look to people around us for help. This is especially true in case of a financial crunch. When we need urgent funds, we look to family & friends for help. But there’s another way to ride out financial crunches, and it’s called a loan against property.
A loan against property is a quick & hassle-free way to get your hands on a large amount of money. If you’re in urgent need of funds then look no further than this efficient borrowing instrument. It offers you up to 60 to 70 percent of your home’s current value as the loan amount. Not only that, it also offers you the option to choose a long tenure of up to 15 years; allowing you the luxury of paying the loan at leisure. What’s more is that, in comparison to personal loans, the interest rate is also very less and will range between 11 to 16 percent. And if you need the funds urgently, don’t worry, the quick processing time of these kinds of loans is another plus point.
Wondering how this instrument can help you in times of needs? Read on, this article will look at four common occasions a loan against your home can help you out.
Most common occasion; new business or business expansion.
Running a business takes a lot of money and is no cake walk! Sometimes, as an entrepreneur, you might require urgent funds to build a new business or to take your existing business to new heights. In times like these, you will look for potential investors, who will have their own terms for lending you the money. Or you will have to go through that embarrassing process of asking family & friends. But why do all that when you can support yourself with a loan against property? You can get a substantial amount of money quickly and without much of a hassle. With a mortgageloan you can also get tax deductions if you can effectively prove that the loan was taken for business expansion.
Second most common scenario to take a loan against property; education:
Now you might be thinking why someone would take a loan against their home when they can go in for an education loan. But this is where the hassle-free application process of a loan against property comes in handy. As long as the home is in your name and you have proof of the ownership, you can easily get a loan without much of red-tape or formalities. What’s more is that the interest rate will be around the same but the tenure of a home loan is a little longer, allowing you to pay back the amount with ease.
Lastly, wedding expenses:
Weddings are always extravagant! And though they might be the most memorable occasion for the two people, they are also equally financially demanding. Thus to cover the cost of a wedding, most people turn to personal loans. But in comparison to mortgage loans, personal loans seem like financial traps! With a loan against your home, not only do you get higher loan amounts, but the processing time is also less, the interest rate is also lower and the pay-back tenures are also longer!
These were 3 of most common instances you might require urgent funds, which also make them 3 instances a loan against property can help you out remendously! If you need to know more about these loans, speak to a loan advisor today!
Many of the world’s business tycoons found their beginnings dabbling in reality. And with rising property rates and growing population in metro cities, investing in property is, most often than not, a financial sound decision. The only problem is buying a piece of land or an apartment is financially out of reach for the most of us. This is where home loans come in handy!
Home loans offer an easy way to finance your investment in property. They give you the liberty to pay some amount out of your pocket while the rest of the cost is provided by the bank or non-banking financial institute. Add to that lower interest rates and long payback tenures and you get the perfect instrument to make your investment dreams come true!
But before you take the dive and opt for a property loan, here are some things to keep in mind that will ensure your loan experience is a smooth one!
Top on the list is to take an EMI you can afford!
One of the main aspects of a property loan is the EMI you stand to pay. Remember that it’s going to put a dent in your monthly income for the next 10 to 15 years and so you shouldn’t over stretch yourself! Some fall prey to a large EMI, thinking their increasing salary should be able to cover it in the coming years. Some may think the larger the EMI, the lesser the tenure and the lesser financial burden of the loan. These thoughts could result in you defaulting on your loan! Rather it’s better to follow this golden rule, never let your EMI exceed 40% of your income. If in future you do earn more, you can pre-pay your amount through the payment of additional funds.
Tip two, give some thought to down payments:
No lender will foot the entire cost of your property, you will have to contribute some amount towards the purchase of the property. Some lenders will provide you up to 90% of the amount you need. But if you have enough funds available, go in for a larger down payment, this will help reduce the financial burden of your loan in the future.
Tenure of the loan:
Now it’s time to decide the tenure of your loan. Opting for a longer tenure might give you a small EMI but you’ll end up paying more interest over the years, choosing a tenure that’s too short will bump up the EMI and you might not be able to handle the financial strain. One expert says that it’s wise to go in for a long tenure because over time your salary is bound to increase, in which case you can make additional payments and pre-pay the loan amount thus cutting down the tenure of the loan.
Tip 4; choose the right type of interest rate:
With property loan, most lenders will provide you two options of interest rates, fixed and floating. Fixedinterest rate, as the name suggests means your interest rate will be fixed and will be protected from market fluctuations and RBI amendments. On the other hand, floating interest rates fluctuate based on market standings and government policies. Meaning, if the market is on the rise then there is a chance your interest rate will drop. Further, if government policies call for lower or higher interest rates, you stand to benefit or suffer from the same. There is a third options some lenders offer, semi-fixed, wherein for the first few years your interest rate will be fixed, following which it will take up the floating interest rate. Before fixing on either one, it’s ideal practice to monitor economic signs such as inflation and interest rate movements. Also keep track of the RBI’s policies, this will allow you to gain insights into the future norms of the interest rate cycle. But most importantly, analyze your personal needs and only then decide which best suits you.
Next, learn about charges & penalties involved:
There are many charges involved with a property loan such as legal verification charges, stamp duty, processing fees, switching fees (in case you transfer your loan or change your EMI or interest type), defaulter penalties, etc. Before fixing on the loan, ask the lender for a written list of charges.
Next tip, take on an insurance plan:
In case of your untimely demise, disability, loss of job or some critical illness; an insurance policy will ensure your loved ones are safeguarded from the financial burden of the loan whilst also keeping the property in your name.
Last tip, make use of the tax benefits:
Ask your financial advisor about the tax benefits for property loans under section 80C and 10D of the Income Tax Act, 1961. These sections will help you get tax deductions from your annual income and give you a way to save a substantial amount of money!
These are just some pointers to help you smoothen your property loan journey! Speak with a financial advisor before fixing on a loan.All the best!
Loan Against Property Avail HDFC’s loan against property for your personal or business needs. Both residential and commercial properties can be mortgaged for taking a property loan.