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Loan Against Property
Want to send your child abroad for higher education?
Want to finance your business?
Want to meet your medical expenses? Want to finance
your daughter's wedding?
Wondering where the money would come from?
Finance your dreams with Loan against Property.You can take Loan Against
Residential or Commercial Property in Mumbai.You can take Loan Against Self-Occupied &
Rented Residential Property if given on rent
A loan against property is what it actually connotes -- a loan given
or disbursed against the mortgage of property. You can now take
a loan against your self occupied residential or commercial property,
to expand your business, plan a dream wedding, and fund your child's
education and much more. This is unlike a personal loan, which is
disbursed to an individual; no questions asked. The loan is given
as a certain percentage of the property's market value (usually
around 50 per cent-65 per cent). If you are Self-employed you can get Loan Against Property
without income proof in Mumbai . What banks requires is only 1 year IT-Return and your cash flow to see
your repayment capacity .But the threshold amount too is
generally defined by most lending institutions like say, Rs 1 Cr
Benefits
There are various advantages of taking a Loan Against property(LAP):
To begin with, it works out to be much cheaper than a personal loan,
which is usually issued at interest rates in the region of 16 per
cent-21 per cent. This is generally on a daily or a monthly reducing
balance method. The rate at which LAP is issued is in the 11 per
cent-12.50 per cent range. The lower rate is partly because the
lending entity has a security in the form of the housing mortgage
vis-à-vis a personal loan that is given without any security.
The tenure for a Loan Against property(LAP)is usually longer than that
for a personal loan. Generally,Loan Against property(LAP) is given for
a maximum tenure of 10-15 years. Since the rate of interest is lower,
many a times, LAP equated monthly instalments turn out to be cheaper
than those under personal loans.
Loan Against property(LAP), just like a personal loan, can be taken for
any reason. Also,the criteria for LAP are the same as those for any
home loan. Part prepayment as well as full prepayment of LAP is also allowed by
most lending institutions; many lending institutions do no levy
extra charges on prepayment.
Points to remember
However, the following points have to be borne in mind while applying
for a Loan Against property(LAP):
Some financial institutions make LAP available only under the floating
rate. Fixed rate loans are off limits. Borrowers need to enquire
before finalising a LAP from lending institutions.
Loan Against property(LAP) is generally allowed against residential property.
In other words, you cannot borrow by mortgaging your commercial premise.Howeever
some ban In fact, even if you own the property, which is rented
out, or you own a property but aren't staying in it (e.g. a farmhouse),
then too you might not be eligible to take a loan against that property.
But of course, some lending institutions do not have any such criteria.
Here too, the borrower needs to be aware of what is on offer and
act accordingly.
Many housing finance companies allow individuals to take Loan Against property(LAP) if
they have taken a housing loan from them. The only pre-requisite-
a minimum of one year's EMIs need to have been paid on the home
loan.
All in all, Loan Against property(LAP) proves to be a useful proposition
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Process
The moment you decide to buy a home, you can put in your application.
Yes, you can apply for a loan even before you have selected the
property.
The property need not even be in the same city where you are residing.
The only condition being that Bank has home loan operations in both
the cities
Loan Against property(LAP)process is basically divided in three stages
1. Pre-Approval
2. Legal and Valuation
3. Disbursal
- Pre-Approval
Pre-Approval is basically individual credit approval based on
the specific set of financial and identity documents.
- Legal and Valuation
Legal and Valuation is the process of evaluation of the
property documents by the banks empanelled lawyer and valuer ,
Lawyer checks the legality of the documents wherein the valuers
determines the market value of the property
- Disbursal
It’s the process of preparing the pay order after submitting
all the original documents as per the lawyers report and signing
of the agreement between the bank and the applicants of the loan.
In Loan against property the process of Pre-Approval and legal&
Valuation is initiated simultaneously.
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Eligibility
A number of factors are taken into account when assessing your repayment
capacity. Your income, age, number of dependants, qualifications,
assets and liabilities, stability/ continuity of your employment
/ business is some of them.
However, there are ways by which you can enhance your eligibility.
- If your spouse is earning, put him/her as a co-applicant. The
additional income shall be included to enhance your loan amount.
Incidentally, if there are any co-owners they must necessarily
be co-applicants. One can include Spouse/Parents/Children as Co-Applicant
if you require higher eligibility subject to maximum of three
applicants.
- Providing additional security like bonds, fixed deposits and
LIC policies may also help to enhance eligibility
Following are eligible to apply for Loan against Property
- Salaried Individuals
- Self employed Professionals/Business men
- NRIs
To apply for loan
- You must be at least 21 years of age when the loan is sanctioned
- The loan must terminate before 58 years or retirement, whichever
is earlier in case of salaried and for self-employed before 65
years.
- The maximum tenor that the banks give the loan is from 5 years
to 15 years subject to the retirement age.
- Your must be employed or self-employed with a regular source
of income
The final amount to be sanctioned will depend on your repayment
capacity. However, what you ultimately are entitled to will have
to conform within the limits fixed for each loan.
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Features
of loan
- Banks offer attractive interest rates
- Door-step service from enquiry till loan disbursal
- Can go for balance transfer fro other bank
- Maximum loan
50-65 % of the market Value of the property and based on the repayment
capacity of the customer.
- Maximum Term
10-15 years subject to your retirement age.
- Applicant and Co- Applicant to the loan
Loan Against property can be applied for either individually or
jointly. Proposed owners of the property will have to be co-applicants.
However, the co-applicants need not be coowners.
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Interest Rates
- Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to Retail Prime Lending Rate
rates of banks. The rate on your loan will be revised every time,
if there is a change in Retail prime lending rate . However, Generally
the EMI on the home loan disbursed will not change if the interest
rate increases, the interest component in an EMI will increase
and the principal component will reduce resulting in an extension
of term of the loan, and vice versa when the interest rate decreases.
- Fixed Rate
Fixed rates depends on the products which you choose from banks,
some banks have fix only for 3-5 years,
Security for the loan is a first mortgage of the property to be
financed, normally by way of deposit of the title deeds or such
collateral security as may be necessary.
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Repayment
You normally repay the loan through Equated Monthly Instalments
(EMIs) comprising both principal and interest. If the final disbursement
is however still pending, you pay interest on the portion of the
loan disbursed before the EMI commences.
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Documents
The following documents needs to be submitted for Pre-Approval
| The following documents needs to be submitted
for Pre-Approval |
| Salaried
Customers |
Self
Employed Professionals |
Self
Employed Businessman |
| Application form with photograph |
Application form with photograph |
Application form with photograph |
| Identity and Residence Proof |
Identity and Residence Proof |
Identity and Residence Proof |
| Latest Salary-slip |
Education Qualifications Certificate and Proof of business
existence |
Education Qualifications Certificate and Proof of business
existence |
| Form 16 |
Last 3 years Income Tax returns (self and business) |
Business profile |
| Last 6 months bank statements |
Last 3 years Profit /Loss and Balance Sheet
|
1. Last 3 years Income Tax returns (self and business) |
| 2. Last 3 years Profit /Loss and Balance Sheet |
| Processing fee cheque |
1. Last 6 months bank statements |
1. Last 6 months bank statements (self and business) |
| 2. Processing fee cheque |
2. Processing fee cheque |
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Security for the loan
Security for the loan is a first mortgage of the property to be
financed, normally by way of deposit of title deeds and/or such
other collateral security as may be necessary. Interim security
may be required, if the property is under construction.
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Fees
0.5%- 1% of the loan
amount applied plus applicable service taxes and cess
No Charges for
- Part Prepayment of loan upto 25% of loan outstanding in a financial
year (except in case of prepayment through a refinance from other
bank or institutions prepayment charges will be applicable)
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FAQs
For what purpose can I avail a Loan Against property(LAP)?
You can take a loan for constructing a house, purchase of a ready
built house / flat or a flat in resale, the takeover of existing
loans from approved banks / housing finance companies, the purchase
of a plot of land, for renovation of the house and extension of
the house
What are the borrower categories who can avail of the loan?
Banks offer loans to salaried individuals, self employed professionals
or businessmen and for NRI individuals
Who can be a co-applicant for the loan?
You can include your spouse/parents/children as a co-applicant for
the Home Loan and we shall include his / her income to enhance your
loan amount. Further, in case there are any other co-owners, they
also need to be co-applicants
What is the security to be provided?
Security for the loan is a first mortgage of the property to be
financed, normally by way of deposit of title deeds / or such collateral
security as may be necessary. Please do ensure that the title to
the property is clear, marketable and free from encumbrance. To
elaborate, there should not be any existing mortgage, loan or litigation,
which is likely to affect the title to the property adversely
Can I repay the loan ahead of schedule
Yes. You can repay the loan ahead of schedule, however if the loan
is prepayed or transferred to another bank or HFC, a nominal fee
@ 4% of principal outstanding is charged
Are the Bank policies subject to change
Yes. These policies are reviewed periodically.
How is the loan repaid?
All loan repayments are done via equated monthly instalments (EMI).
What is an EMI?
An EMI refers to an equated monthly instalment. It is a fixed amount
which you pay every month towards your loan. It comprises of both,
principal repayment and interest payment.
When does the repayment start?
EMI payments start from the month following the month in which the
full disbursement has been made.
How is the EMI paid?
The EMI is to be paid every month through post-dated cheques (PDCs)
or Electronic Clearing System (ECS)
What if a PDC bounces?
In the case of a bounced cheque or delayed payment, charges and
outstanding dues will be charged as per the prevailing company policy.
What is pre-EMI interest?
In the case of part disbursement of the loan, monthly interest is
payable only on the disbursed amount. This interest is called pre-EMI
interest (PEMI) and is payable monthly till the final disbursement
is made, after which the EMIs would commence.
What is the minimum loan amount?
You can get a Loan Against property(LAP) starting from Rs. 5 lakh . The loan amount
depends on your repayment capability and is restricted to a maximum
of 55-75% of the market value of the property applicable.
Repayment capacity takes into consideration factors such as income,
age, qualifications, number of dependants, spouse's income, assets,
liabilities, stability, continuity of occupation and savings history
How
much time will it take for my loan to be approved?
It takes a week for your loan to be sanctioned after you have submitted
all the documents
When will the loan be disbursed?
Your loan will be disbursed on:
- Your identification and selection of the property.
- Submission of the legal documents.
- Legal and technical clearance of the property
- Investment of your contribution towards the property
What is an amortization schedule?
An amortization schedule is a table giving the reduction of your
loan amount by monthly installments. The amortization schedule gives
the breakup of every EMI towards repayment interest and outstanding
principal of your loan
Can I get IT certificates in the name of both the Applicant
and co-Applicant separately
As per the IT rules only one certificate can be issued for a home
loan and hence one certificate will be issued in the name of both
applicant and co applicant
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When is the IT certificate issued?
The IT certificate will be issued at the end of a financial year.
You can expect to receive your copy of the IT certificate in the
month of April or May.
How can I get the tax benefit during the year?
You can request for a provisional IT certificate that can be issued
any time during the course of the year
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