Loan against property: Meaning, Features, Eligibility, Documents
Loan against property: There are different kinds of loans available in the market. Loans against the Property, Personal Loans, Car Loans, Gold Loan, Limits, etc. Every loan has its own characteristics such as tenure, rate of interest, margin of securities etc. In this article, we will be discussing about a particular category of Loan which is Loan against property.
Government has taken numerous steps to ensure that loan taking process is simplified. One of these initiatives involves simplified loan against available property.
Loan against property is a kind of secured loan, where loan is availed by keeping property, which may be commercial or residential property as collateral with lender.
The loan can be used for Specific/any purpose, as there is restriction on end use of funds so given. The Loan availed in this way can be used for business expansion, marriage, education etc.
Features of Loan against property
- Primarily the amount of loan to be disbursed depends on the valuation of property provided as collateral for the loan. Along with the property value, it will also depend on the income details provided by the borrower, business or employment track, etc.
- Bank charges which may include documentation charges, processing charges. This may be based on percentage of Total loan availed (0.01%-3%) or as per the slabs, charges on account of early repayment of loan. Banks also provide various festive schemes and processing fee waiver schemes. The same should be given due attention on at the time of processing of the loans.
- The interest rate varies from 10% to 15% depending upon the Loan Type and credit rating of the intending customer.
- The Margin amount varies bank to bank. Some bank prefers to give only 50% of the value of collateral property while other bank may even give up to 70%.
- The maximum tenure of the loan is 15 years. The clients can choose the tenure, which suits best for their requirement.
Eligibility for Loan against property
Below is the eligibility criterion for availing loan against the property. The list is indicative and may vary from bank to bank.
- Borrower should be resident of India.
- Age of borrower should be in between 25 years to 60 years.
Documents required for availing the loan against property:
Below is the list of basic documents required to avail loan against property. Some documents may vary from bank to bank depending on the type of loan availed against property, and may require more additional documents as per the bank policy or RBI guidelines. Hence the below mentioned list is only indicative.
- KYC documents, which will include Identity proof, address proof.
Aadhar card is mandatory. For identity proof one may provide Voter’s ID card or Employer Card or Passport.
For residence proof, one may provide a copy of electricity bill/ telephone bill.
- In case of borrower being self – employed, income Details which shall include, income tax return along with audited financial statements of previous two – three years.
- In case of borrower being salaried individual, income details, which shall include income tax return of previous two years, salary slip for last three months. The return of Income Tax should be annexed with the computation of income.
- The Bank statement of previous three months in case of salaried employee, and six months in case of self-employed.
- Account payee blank cheques.
- Property documents which shall include sale deed, property valuation by lawyers, the original land documents like sanctioned maps, permits from local authority, etc.
- The bank will also check the credit rating of the interested customer before going ahead with their loan.
In this way, we can easily avail a loan against property if we have a clear title over it.