Loans against property
Introduction
There are times when you require a loan to finance a dire need or tide over a cash crunch. At these times, your property can be a suitable security to structure your loan and meet your requirement.
Loans against property give you access to finance, on the basis of the property you hold. You don't have to worry about loan applications being rejected or too many questions from the bank or financial institution. And again, there are no restrictions on the purpose for which the loan can be used — marriage expenses, children's education, travel costs, or home renovation — you can use this loan for almost anything since it has a sound security backing it.
However, as with other loans, you do need to traverse through some paperwork. And that's where MoneyRaksha steps in to make the process smoother and easier for you.
Loan eligibility
The loan amount ranges from Rs 2 lakh to Rs 1 crore, depending on your income, savings, debt obligations, value of the property, and of course, your repayment capacity and track record. The loan amount comprises a certain percentage of the market value of the property; the maximum amount you can borrow is generally 70 per cent of the market value of the property. This could vary depending on whether the property is a commercial or residential one. Also, remember that most banks do not accept properties that are on lease or those that are based on a power of attorney.
Fees and charges
While this multi-purpose loan can be easily availed, make sure you scan through the fees and processing charges that accompany the loan. This may include:
- A processing fee of 0.05 per cent to three per cent of the loan amount, which has to be paid up front. However, this fee is deducted from the loan amount disbursed to you.
- Pre-payment charges that may be levied according to the foreclosed amount.
Loan repayment
Loans against property have to re-paid within a maximum period of 20 years depending on the loan amount and your individual capacity. It is important to note that if you are unable to pay the full loan amount, the bank or financial institution can take possession of your property. Therefore, be wise when you make your decision.
Loan documentation
In addition to the standard documents such as identity and residence proof, income proof, and bank account statements, a loan against property would require you to submit one (or more) of the following documents (as applicable):
- Allotment letter from the cooperative society;
- Agreement for sale/ sale deed for the property;
- Original title deeds of the property;
- Latest paid receipts of maintenance, water, tax, etc;
- A non-hindrance letter from the cooperative society.
Compare loans
If you do qualify for a loan against property, it is certainly preferable as it offers a longer tenure for repayment, a lower interest rate, and a variety of repayment options. However, we do advise that you compare loan offers before choosing one gives you maximum benefits and serves your purpose. You must check for:
- The right interest value, amidst different interest rates such as monthly reducing rate, flat rate, etc.;
- Various charges such as processing fees;
- The customer satisfaction ratings of each bank;
The total cost of your loan is the loan amount + total interest charged throughout the loan tenure + processing fees and other taxes.
The MoneyRaksha touch
When you choose to make use of the power of your property to raise money for your requirements, we, at MoneyRaksha, help you make an informed choice. We seek to give you:
- The lowest interest rates;
- Quick, customised loans;
- Easy comparisons based on cost;
- Objective information, with no fine print;
- Complete privacy of your contact information;
- Free services.
My MoneyExpert
- Fill in your requirement in the eligibility calculator to receive a customised loan against property quote.
- Compare loan offers you receive and select the one that serves your purpose.
- Your application is forwarded electronically to the bank you chose.
- The bank contacts you within one working day.
- MoneyRaksha sends you email and SMS alerts to keep you updated with the status of your application.