Salient Features of a Loan Against Property - IndianMoney.com

 

 

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Salient Features of a Loan Against Property?

 

You need money for your daughter’s marriage urgently. You can avail a personal loan .But you are worried. A personal loan charges you a very high rate of interest (around 16-22%).

How would you repay your personal loan? Then you remember your house and decide to take a loan against property.

What is a loan against property?

 

 If you own a house/property with a clear marketable title then your bank will sanction you a loan against your property. The bank will sanction you a loan against 60-70% of the value of your property.

The loan against property is a secured loan (collateral is your property).

Salient features of a loan against property sanctioned by your bank:

• Your property/house has a clear marketable title with no mortgages (encumbrances) on it. The property continues to be in your name even though a loan has been taken against it.

• You have all documents showing proof of ownership of your house/property. You need to show an identity proof (your PAN card, Voters card) as well as an address proof/residence proof. (Passport, electricity and water bill or a ration card).

•  Your house/property needs to be insured.

•  The bank charges you an interest of around 12-16% for the loan against property.

•  The bank will sanction your loan against property only against (60-70%) of the value of the property.

•  You need to have a minimum age of 22-24 years and a maximum age of around 58-60 years to avail a loan against property.

•  You need to show a proof of income such as your 6 months bank statements.

• If the house/property has more than one owner (2 or 3 owners) then the approval of all the owners is necessary to avail a loan against property.

•  You can avail a loan against property even if you reside in the house or have given it on rent.

•  The tenure for which the bank sanctions the loan against property is around 8-10 years, but can be prolonged up to 15 years.

• You need to file 3 years ITR (Income tax returns) before applying for a loan against property with a bank.

What if you are self employed?

If you are self employed (run your own business) then you need to show Certified Financial Statements (Profit and loss account and the balance sheets) of the past three years.

If you are self employed you can repay the loan against property before you are 65 years of age.

It is difficult to get a loan against property if you are self employed and just started a business. The business needs to be running for at least 3 years (Should be at least 3 years old).

You need to file ITR (Income tax returns) for at least 3 years before applying for a loan against property from your bank.

You need to be careful:

Your house is a prized asset (You would not want to lose it).You must avail a loan against property only if you are confident of repaying the EMI’s to the bank. A default might cost you your house.

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