Wednesday, November 30, 2022

How Can I Get a Loan Against My Property?

Loan against property schemes is gaining popularity these days. These are considered as one of the safest forms of loans and the interest rate that the borrower has to pay is also relatively lower as compared to other forms of loan. If you are also thinking about getting a loan against property, then read the following article. It will help you understand what is a loan against a property, what are its benefits and features, and how you can get a loan against your property.

What is a loan against property?

A loan against property is one of the most secured forms of loans where the borrower pledges his property to get the loan amount. This property can either be a house, an owned land or any commercial premises. The property remains under the sole authority of the lender till the completion of the loan tenure and once the borrower pays off the entire loan amount, the lender returns the property to the borrower.

However, it does not mean that the borrower cannot use the property. If it’s a house then the borrower can continue living in it or if it’s a commercial property, like a shop, he can still do his business normally during the loan tenure. 

How to get a loan against property?

Here is a detailed procedure that will help you to get a loan against your property. Most of the steps in this process can be done online but to verify the property papers and other documents you still need to go to the lender’s office physically. An official from the lender’s office can also come to your house but it varies from lender to lender.

  1. Open the website of the bank or lending institution from where you want the loan. 
  2. Find the link for the application for a loan against property and click on it. 
  3. It will lead you to an application form. Fill out the form with your details, such as your name, mobile number, age, gender, email ID. Also, fill out the other information about your employment status and the property you are going to pledge as collateral. 
  4. Confirm all the details filled in by you and submit the form. After that, a representative from the lender’s side will contact you for the verification of your financial and property details. They will also check your credit score in this process.
  5. In the next step, you will have to submit the required documents that verify the information provided by you and your eligibility for the loan.
  6. After the validation process is completed, the lender will inform you about how much loan amount you are eligible for against the property you are pledging. You can also present the lender with your offer and come to a point where both parties agree to seal the deal. 
  7. In the next phase of this process, the lender will evaluate the property’s current market value. They will also check whether the property you are giving as collateral is completely legal and owned by you. After this evaluation, you will get a sanction letter from the lender and the loan amount will be disbursed to you. 

Also Read: Business Loan without Security: What is it?

Required documents for loan against property

Here is a list of the documents that lenders ask you to show while getting a loan against property:

For salaried individuals

  1. ID proof
  2. Address proof
  3. PAN Card/Form 60 of all applicants
  4. Latest salary slips
  5. IT returns
  6. Documents of the property 
  7. Bank account statements of last 3 months
  8. Title documents

For self-employed individuals

  1. Address proof
  2. ID proof
  3. PAN Card/Form 60 of all applicants
  4. Primary account statement of the last 6 months
  5. Income documents like financial statements, Income Tax returns, etc.
  6. Title documents
  7. Documents of the property 

Eligibility criteria for loan against property

  1. The age of the borrower should be at least 18 years and not more than 70 years.
  2. The borrower should have Indian nationality.
  3. He should own legal house/land in India that he is going to give to the lender as collateral. 
  4. He should have a steady source of income.

Benefits and features of loan against property

Lower interest rate 

Loan against property interest rate is relatively lower because the secured forms of loans are usually available at lower interest rates as compared to other forms of loan. 

Simple application, documentation and approval process

The application process for a loan against a property is very simple. Moreover, if you have all the documents ready and there is no issue with your property then the documentation and approval process is also completed in a hassle-free manner. 

Flexibility in loan repayment

In most of the loan repayment cases of loans against property, borrowers get flexible tenure. Based on the lender’s policies, you can even get a repayment period of 20 years.

Continuous usage of the property

In this loan, you can continue using the property that you are pledging as collateral. However, because the authority of that property has been shifted to the lender, you cannot sell it to any other person, except to the lender.

Upon reading the article, you can determine if you are eligible for a loan against property, as well as how to apply for one. The loan comes with its benefits, and if you choose the right lender at a good bargain, you can get a decent loan amount at a competitive rate of interest.

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