Financial emergency can occur at any point in your life. In such circumstances, a loan is the best option to deal with the financial crunch. With the multiple public and private sector banks offering different types of loans, availing a loan has become very easy. While you can avail a personal loan to finance your personal needs but the loan amount might not be sufficient to fulfill your cash requirement. Availing a loan against property is a better option in such a situation. Loan against property as the name suggests is a secured loan availed by mortgaging your property (residential or commercial). Amount of loan depends upon the fair market value of your asset to be mortgaged. Lenders apply a Loan To Value Ratio (LTV) to the fair market price of your property to be mortgaged, to determine your loan amount eligibility.
Advantages of Loan Against Property
Loan against property being a secured loan is available at a lower interest rate in comparison to an unsecured personal loan. The interest rate on loan against property starts at 8.75%. Hence, it is beneficial to take a loan against the property to meet the financial crunch.
Loan against property can be utilized for both business and personal purpose, unlike a personal loan which is availed only for financing personal needs. There is no strict supervision over the utilization of loan; you can use it as per your wish.
Loan against property is a long-term loan, which can be availed for a period ranging up to 15 years. As you avail a larger amount of loan, longer tenure implies pocket-friendly EMIs. Longer tenure eases your debt burden, whereas a shorter tenure results in financial burden.
Ownership of Property
Loan against property is availed by mortgaging property, but the ownership of the property to be kept as security lies with you. Unlike in home loan where ownership lies with the lender till the time you repay your loan.
Easy to Avail
Almost all lenders easily approve secured loan. Hence, a loan against property is easy to avail in comparison to an unsecured personal loan. For quick approval of your loan keep the required documents ready.
The eligibility criteria to avail a loan against property varies across lenders. Some of the common eligibility criteria are as follows:
- The age of the applicant should be at least 21 years and not more than 65 years.
- Both salaried and self-employed individuals can apply for a loan against property. If you are salaried then a minimum net take-home income of Rs. 40,000 per month is required and if you are self-employed then an annual income of Rs 3 lakhs is required.
- For salaried applicants, a minimum work experience of 3 years is required and for self-employed individuals, the business existence of 5 years and above and ITR of 3 years is required.
List of Documents Required
- Identity Proof: Driving license, Passport, Voters ID, PAN card, Aadhaar card.
- Residence Proof: Aadhaar card, Passport, Ration card, Utility bill.
- Bank statements for the past 6 months.
- Property documents: Sale deed, Maintenance bill, Share certificate, etc.
- Income Documents for salaried: Latest 6 months salary slips and Form 16.
- Income Documents for self-employed: Income Tax returns, Profit & loss account statement, the balance sheet for the last 3 years of your business.
- Business Proof: Company registration license, Shop establishment act or Tax registration copy.
Additional Reading: Is loan against property a good option for debt consolidation?
Keeping in mind the benefits of availing a loan against property, apply for it through online aggregators. You can seek the help of their loan representative to clear your queries regarding the loan process and offers.