Taking a loan against property isn’t as tedious as it was before. Many banks and non-financial institutes now offer loans against property with applications that can be taken out directly from their websites. So if you’re looking to take such a loan, you can rest assured to receive one without much of a hassle. But before you do so, here are some absolute essentials you need to go over, just so you know what you’re getting into and to ensure your entire loan application process begins and ends much smoother.
First you need to know what your property is worth.
Before going in for a loan against property, it is essential to know the accurate value of the property you wish to mortgage. Otherwise you may expect a certain loan amount but your property might not fetch that amount, causing your further plans to come to a halt before even applying for the loan. So before you apply for a loan against property it’s an ideal practice to ascertain an accurate value of the property to wish to declare in exchange for the loan amount.
What is the loan amount you can expect with a loan against property?
To begin, the loan amount cannot exceed the value of the property. But you can expect somewhere in the ballpark of 70% to 90% of the value of your property as your loan amount. So say you property is worth 1CR, then you stand to receive anywhere between 70 to 90 lakhs as the loan amount. The amount you receive as part of your loan will, however, vary from one financial institute to another.
What is average interest rate when it comes to loans against property?
Knowing the interest rate is an absolute essential before taking out a mortgage loan, or any other loan for that matter. Getting to the point, if you are planning to take out a loan against property, you can expect to dish out anywhere between 9.65% to 16% as interest depending on the loan amount and the financial institute you choose. A word to the wise is to always go interest rate shopping; there are numerous sites on the internet through which you can find a comparison of interest rates for loan from varying banking and non-banking financial institutes.
What is the maximum tenure for loans against property?
Again, this is something that will vary depending on the loan amount and the financial institute. However it’s worth noting that the maximum tenure is 15 years or 180 months. The tenure is also bound to vary depending on certain criteria specific to your loan.
Real estate ownership and other fees involved.
If you are the sole owner of the property in question then you will have no problem acquiring a loan. But if the property is co-owned, then the other parties will need to agree completely with your decision to take out a loan against property. If the property is disputed, or you cannot furnish all the documents for the property or the co-owners do not agree with your decision, then there is high chance your loan will not be approved. As far as other fees involved, apart from the interest rate, you can expect to pay other fees such as processing fee, pre-closure charges, sales tax, agent cost and more. Familiarizing yourself thoroughly, with all these charges or fees that have to be paid for before applying for a loan is an absolute essential.
Now that you know the absolute basics when it comes to loans against property, you can fearlessly weigh your options and take out a LAP with complete peace of mind.