Everyone wants to have a secured future, which requires a certain amount of investment or money. Through loan against property, people can dream about their future and fulfill them like academics, home or personal things too.
With these vast plans and the initial investment, people become anxious about how are they going to arrange it?. People start brainstorming upon the alternatives of arranging of cash, like selling their properties, etc.
People are afraid of losing or compromising something, and in this nervousness, they don’t take the opportunity to brighten up their future.
Rather than selling a property, one should mortgage it to secure its future.
Pros
1. Secured loan
2. Selling one’s property is a myth.
3. You can live in the same home.
4. Being a secured personal loan makes the rate of interest is considerably low.
Purpose of Loan against Property
The loan can be used for the following purposes:
· Educational opportunities in India or Abroad.
· Family occasions like marriage.
· Travelling
· Proper medication.
· To start up a business or commercial venture.
It depends on different banks about how much flexibility do they provide in relation to the fund usage as per the customer choice. However, a borrower is not allowed to use these funds for illegal activities in any case.
Loan Amount
The loan sanctioned by the discretion of each bank. The majority of the banks give loans up to 70% of the collateral (asset). It is totally upon the bank to decide the loan amount. Each bank has different eligibility criteria to sanction a loan application.
Tenure
If required collateral is provided, then a loan is given up to tenure of 15 years.
Rate of Interest
The rate of interest can be different for each bank. It roughly ranges from 8.70% to 18%. It is just an informal estimate for exact information. However, it is advised that you confirm it with the bank.
Criteria
Though criteria vary across banks, some of the similar criteria’s are given below:
· Monthly Income.
· Mortgaged property’s value.
· Credit history.
· Income tax returns.
Evaluation & Disbursement
When a loan application is submitted proper verification of documents and inspection of the property mortgaged is done to evaluate its actual amount as per the condition of the property.
Documentation for Individuals
· Registration form.
· Valid Identification proofs.
· Salary slip.
· Bank statements for the previous 6 months.
· Registration fees.
Documentation for self-employed or businessmen or businesswomen
- Registration form.
- Valid Identification proofs.
- Salary slip.
- Income proof: (Form 16 and Salary Slip) Income tax returns of the previous 3 years (business and self).
- Last 3 years Balance Sheet and Profit /Loss statement.
- Certificates of Educational Qualification and Certificate of Business Incorporation.
- Last 6 months bank statements.
- Registration fees.
Tips on Documentation
The formalities might be tiresome and boring, but these are very crucial documents that help the lender to check your credentials. The borrower has to make sure that the documents required are arranged properly before submission.
You have to control your transactions as the banks continuously monitor it, which include transactions like bill payments, EMIs, etc.
If you already have a few loans on hand, then try to clear them first before applying for a loan against property.
Issues
The only con of this loan is that if you are unable to pay the loan on time, then the bank can take over your collateral. But this issue is somewhat flexible. First, they are open to some alternate solutions. Taking over the property is the last option.
To take up a loan against property, one has to plan properly and have to keep a check on his/her regular expenses as this loan has its advantages and disadvantages. One must double-check everything before applying.
For example, if you apply for an educational loan, then you have to expect a higher return from your future income which can help you to repay it.
If you use your loan for business, then you should study your past and present profits or losses, and you should also research the future profits and losses too.
You must try to pay the installments from regular income and even save some amount as a back up so that in case of emergency you can pay off the installment.
However, if you want this loan for higher education or start-ups, then you can apply for this loan to fulfill your desires.
