A loan against property, as the name suggests, is taking a loan by offering your property as collateral. It works on a similar concept as Loan against Gold. Banks, Housing Finance Companies and NBFC’s provide loans against residential or commercial properties. The EMI on these loans is lesser as the interest rates are lower on these loans.
With a loan against property, you are more likely to receive a larger loan amount compared to a personal or business loan. Hence, it is convenient to do a business expansion or take care of personal expenses through a loan. a loan against land or house is a safe way to avail of extra funds at low interest while keeping your assets secure.
Companies offering home loans offer lucrative loans against property options that you can explore to tackle your financial needs.
Before you apply for Loan Against Property, learn the following facts about it:
1. Floating rates of applied interest rates
Floating rates are charged on loans against the property by the lenders on the borrowers throughout the repayment of tenure, and the amount is dependent on the interest rate of loan against land. For now, the interest rate charged by lenders varies from lender to lender. So before you apply for a loan against property, discuss the facts of floating rates with your lender.
2. LAP against the mortgaged property
If you have already availed of a loan against your land, and you still want a loan on the mortgaged property, then you should follow the following criteria:
- Eligibility – In the period of buying your property and availing its loan, if the market value of your land is increased, then one can get the 60% market value of their property.
- Down Payment – If your down payment is higher and the loan is lesser, one can apply for a high loan amount against the land.
3. No Tax exemptions
There are no tax benefits and deductions in the loan against property. Although, one can claim all the possible tax exemptions on the existing loan from your property.
4. No charges on partially or repayment
Usually, no penalty is charged on the repayment charges of the loan against property. To avoid any future hurdle, discuss with the lenders if they are charging any penalty for the repayment. Although, one can find the related details in the loan documents.
5. Go for Co-applicants
If the multiple owners own the piece of land, they need to find a co-applicant before applying for a Loan against the property. It should be done to confirm the lenders that all the owners are ready to give a loan by mortgaging their property. One can also include their spouse or children as their co-applicants even if they are not the actual owner of the property to improve their loan against land eligibility.
6. The purpose of availing the loan against land
Although the loan against property can be claimed against the property, the purposes of loans may vary according to the person. It is a high-value sanction and generally is used for heavy expenses:
• Business Expansions
• Marriage expenses
• Debt Consolidation
• Medical Treatment
• Education abroad
• International vacation
7. Loan Against Property Eligibility Criteria for Loan
The eligibility criteria for loan against property are dependent on the source of your income, the market value of the property, and age, which may vary for various banks. Some standard eligibility criteria for loan against land are given below:
- Income criteria – The applicant should be salaried, an employee at any company or public sector. In the case of the business owner or self-employed, one should have a stable monthly source of income.
- Age criteria – The salaried people, must be between 33 to 58, and self-employed should be 25 to 70 years.
- Property criteria – The property should be free from any obligations and should be insured against fire, natural disasters, and other problematic situations at the time of tenure.
8. The Loan of property documents required
To ensure your eligibility criteria, the applicant should prepare the following documents to get the loan against the property without any trouble:
• Salary slips of last six months
• Statements of Bank account
• ITR document
• Photo ID proof either Aadhaar card or PAN card
• Property paper
9. Importance of Credit Score
Lenders also consider the credit score of the applicant rather than the income. Try to maintain your credit score up to 750 as it describes your creditworthiness. Higher the credit score, the lesser amount of troubles you have to face during the sanction.
10. Major benefits of loan against land
If someone wants to secure a higher value of assets, then the applicants will get the following benefits:
- Lower interest rates – The interest rates are 3% lower than the interest rates of personal loans due to the lower security risks. One can find their interest rates with the help of a loan against property interest rate calculator.
- Long repayment tenures – As the assets are high, the applicant can pay their loan in long tenures.
- Affordable EMIs – As the interest rates are lower and the repayment tenures are also long, the EMIs becomes automatically lower than other loans. You can pay your debts in smaller monthly installments. To check your EMI, one can opt for an online loan against a property EMI calculator.
Another way to decrease the EMI is to opt for Flexi loan features. In this feature, one can get their assets in small parts multiple times, and the interest rates are charged based on sanctioned money. With this, it becomes the most convenient loan for the applicants.
If you are trying to apply for Loan Against Property, then evaluate all the factors such as interest rates, floating interest rates, and other aspects of personal, business, or home loans. Indian companies offering housing loans have been offering loans against property for years and provide it on reasonable terms that are beneficial to you. Connect with us on our Loan Against land or home Customer Care via mobile or SMS/email us to get all your queries resolved related to housing loans.