Broadly speaking, there are two types of loans that one can avail in India- secured and unsecured. Secured loans, as the name suggests, are those loans where you have to keep an asset as security against the borrowed money with a transfer of interest of that asset to the financial institution.
A loan against property is a form of secured loan where you have to keep one or more of your properties as mortgage. It is one of the most preferred types of loans in India because of the numerous benefits that they come with.
How Does A Loan Against Property Work?
As mentioned earlier, a loan against property in India is sanctioned by keeping a property as a mortgage. It can be either a residential or commercial property or even a piece of land. Once you submit all the loan against property documents required, the lender sends an appraiser to evaluate the condition and value of the property. The mortgage loan process is quite simple. The loan amount to be disbursed is based on the value of the property. Generally, lenders offer up to 70% of the value of the mortgaged property as loan. This percentage is known as the Loan to Value. You may be eligible for a higher or lower Loan to Value depending on your eligibility as a borrower.
Who Is Eligible For Loan Against Property?
As a secured advance, loan against property eligibility criteria is quite relaxed. Both salaried and self-employed individuals can avail this type of loan. The eligibility criteria for salaried individuals are as follows:
- Age between 33 and 58 years
- Resident of India
- Employed in the formal sector
For self-employed individuals, the eligibility criteria are as follows:
- Age between 25 and 70 years
- Resident of India
- Must have a stable source of income
One has to submit documents supporting these eligibility criteria to avail a Loan Against Property. Loan against property documents required include:
- KYC documents
- PAN card
- Bank statements
- ITR
- Copy of the property papers to be mortgaged
- Salary slips (only for salaried individuals)
Features Of A Loan Against Property
Loan against property is considered one of the most preferred types of advances in India. There are several benefits of such loans.
First and foremost, the interest rates are quite low compared to unsecured loans, which automatically make it a more attractive proposition. Also, unlike gold loans, where you have to deposit your ornaments to the lender, you can continue using your property even during the loan term. A mortgage is only a transfer of interest and not of ownership from the borrower to the lender.
These loans are also marginally easier to avail. The eligibility criteria are quite simpler and you can avail it even with a comparatively lower credit score as the lender has your property as a security against defaults.
There are several other features of loans against property which make it a preferred choice for countless borrowers in India.
- High Loan Amounts
Loan against property is one of the highest value loans that you can avail in India. The lender decides the actual loan amount you are eligible for after evaluating the value of your mortgaged property.
For example, Bajaj Finserv offers Loans Against Properties of up to Rs. 1 Crore to salaried individuals, whereas a self-employed person can avail a loan amount of up to Rs. 3.5 Crore.
- Long Tenures
Most financial organisations offer tenure ranging between 15 to 20 years. Such extended tenure will leave you with affordable EMIs the entire loan amount and the interest is distributed into multiple instalments, e.g. – 240 instalments for a 20 year tenor.
You may calculate your EMI for different tenure with the help of an online loan against property calculator and choose an appropriate loan amount and tenor. Refer to lenders who provide Loan against property EMI calculators and similar borrower-friendly features such as Bajaj Finserv.
Bajaj Finserv also brings you pre-approved offers that make availing loans quick and easy. Pre-approved offers are available on numerous financial products including secured credits like home loans, unsecured credits like business loans and personal loans, etc. You can take a look at your pre-approved offer by providing your name and phone number.
- No End-use Restrictions
Loans against properties come with no end-usage restrictions, which means that you can utilise the loan amount for any purpose you like such as funding higher education, meeting wedding expenses, medical emergencies, a residential or commercial property purchase, etc. You can even utilise the loan amount for debt consolidation to manage your finances better.
Loan against property is one of the easiest and most secure ways to gain external financial assistance in India. Choose your lender wisely and avail the numerous benefits of a loan against property.