Loan against property is a type of loan which can be obtained for resolving various financial hurdles that come in front of companies in the business. This type of loan, generally, is a long term based loan, where the security is the equitable mortgage of the immovable property. As the name suggests, loan against property is the most secured type of loan for lending institutions, and most easily available loan for the borrowers in normal circumstances.
Being a type of loan with such a huge significance in the financial outlook, there are certain factors that are to be considered for a Loan Against Property, or mortgage loan. Factors are also dependent on the conduct of the financial institution, they set their own guidelines, but most of the times; they are the same. Age of an applicant is an important eligibility factor here, firms keep the criteria from 18 – 70 year old, or 25 – 65 years old. There are also criteria for salaries or minimum income. In most cases, work experience for salaried individuals is set at 3 years and above, and for the business, the stability should be present for the last 5 years. CIBIL score must be good enough for the lending institution to speed up the process, and provide a hassle-free loan against property. Personal, residential, commercial and rented properties are all eligible to be mortgaged for this loan.
Types of loan against property are based on the profile and requirements of the client, ie, the borrower. Here are the types of loan against property.
Based on the current market value, borrowers can mortgage their residential or commercial properties to obtain the amount of loan, to support any type of financial requirement.
Self-employed individuals can obtain a loan against property, they can avail a higher amount then regular employed individuals, the specific amount varies from firm to firm. It is however, required to meet the property eligibility criteria.
Employed individuals can also avail a loan against property with an interest rate, they can use this loan to fund their monetary requirements like house renovation, buying another property, funding wedding, medical help etc. The borrower must belong to the specified age criteria of the lending institution.
A loan against property can be obtained for fulfilling the educational requirements of individuals, upto a sum of rs 3.5 cr can be obtained to fund tuition, accommodation, and travel expenses along with the core educational expenses. The repayment plan can be decided as felt comfortable to the borrower.
Weddings cause tremendous lack of funds, due to the extensive amount of expenses such an event requires. A loan against property can be availed for funding wedding, the amount depends upon the individual, whether it is a salaried or a self-employed individual.
The beneficial features of loan against property are basic, and can be realised by the borrowers before they apply, this loan is the must suitable type of loan because the property is one strong form of collateral security, for various purposes of finance, the property can be mortgaged and a loan can be availed by the borrower in accordance to the property’s current market value.
Here are a few common benefits of Loan against property
It is not a lengthy process, but a lot of documentation is involved in the same, we have prepared a step by step process to obtain a loan against property, which is as follows;
Study of the external and internal commercial environment is necessary before applying for such a loan, research also helps the borrowers to choose the right lending firm.
Finding out the maximum amount of which the loan can be availed is necessary, and it is based on the borrower’s requirements, the maximum amount that can be obtained also differs according to the profile of the borrower, whether he is a salaried or a self-employed individual. Also, the market value of the property plays a critical role here.
The borrower must meet the eligibility criteria, as set by the lending institution. It can be the type of property, or age of the applicant, etc.
Interest rates of loan against property depend upon the repayment schedule, EMI tenure etc, it ranges from 9%-15% depending on the lender, for a period ranging anywhere from 7 to 15 years.
The requirements for loan against property depends on the lending institution, or banks, usually, the status of the applicant whether he is an employed individual or a self-employed professional.
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