Loan against property is that loan that is given by a bank or financial institution when a Borrower mortgages his/her property to the bank. The loan is not equal to the whole market value of the property but is a fraction of it. The amount of the loan varies from 40% to 60 % of the total loan amount.
As the bank gets a security for providing you the loan, the loan is offered to you at a lower rate. A personal loan in India is given at a repayment interest rate of 13 to 25% where as the loan against property can be availed at a rate of 11% to 16% interest rate.
You can also A apply for loans online in India.
Fine Points about Loans and Loans against Property Eligibility
- If the property that you have mortgaged has more than one owner, all the owners are required to apply collectively for the loan.
- Loan against property can be taken against a range of properties. Whether you own a plot, a house, live in the house you wish to mortgage, you can take a loan against it. You can also take loans against a property that you have rented to others. The property must be freehold, and you should be the owner of it.
- The bank will check all the documents related to the property. During the loan process, you will be required to have documents that show that you have the title of the property, telephone bills, electricity bills, and residence proof. Identification proofs in the form of PAN card, passport or voter ID card are also required. In case you are a salaried employee, your bank statements for the past 6 months would be required. If self-employed, the bank would require financial statements and balance sheets of the past 2 years.
- At most banks, the minimum age required is 21 years, and the maximum age is 60 years for an employed person or 65 years for an unemployed person.
- Further, the banks also review your financial reputation by accessing and reviewing your credit score. If you have a good financial track record and have a good credit score, then the loan will be granted to you rather easily. The bank will access your repayment capacity and grant you the loan when satisfied on all counts.