Unlock Your Property’s Value with Loan Against Property in 2023

February 27, 2023

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Loan Against Property or a property loan is a financial assistance tool available with an immovable asset or real estate as collateral. This secured loan can be used for myriad reasons instrumental in wedging your financial gaps. Individuals often rely on their bank savings to meet different financial needs, but it is always prudent to use external assistance and not strain your hard-earned savings. A property loan can be helpful in many ways. Whether it is your child’s education or some wedding expenditure, maybe you have debts to consolidate in one go, or there is some unforeseen medical stance, a loan against property gives you useful financial inflow to have all your random/ not-so-random expenses begone, once and for all.

Check out the Best Loan Against Property Schemes

Second thoughts are common when it comes to a property loan being a financial instrument for meeting ends. It is mainly owing to the fact that a loan against property requires one to keep their real estate as collateral. However, property loans are undoubtedly the bn affordable loan against property interest rates and easy repayment tenure to a good amount of sanction, this loan is undoubtedly the best deal to try for.

Loan Against Property Interest Rates 2023

State Bank of India 10.90% onwards  Up to 7.5 crores
IIFL 10.75% onwards  Up to Rs.10 crore
Axis Bank 9.9%% onwards  Rs.5 lakh – Rs.5 crore
IDFC First 8.25% onwards  Up to Rs.7 crore
Tata Capital 10.1% onwards  Rs.10 lakh – Rs.3 crore
Edelweiss Financial Services Ltd 9.98% onwards  Up to Rs.25 crore
Kotak Mahindra Bank 9.15% p.a. onwards  Rs.10 lakh – Rs.5 crore
HDFC Bank 9.5% onwards  Up to 65% LTV

Factors affecting Loan Against Property Interest Rate

If you are considering a property loan to take care of your financial emergencies then a loan against property is undoubtedly the option made for you. You can offer your commercial or residential property to the lender as collateral and get a loan at amazingly low-interest rates and flexible repayment tenure options. Moreover, the loan against property interest rates is decided based on several factors, including the following.

  • Property – The first and foremost factor is the condition of the real estate. Banks consider the property’s age, its appreciation value, whether surrounded by amenities, etc. There is a thorough property evaluation done before banks quote a deal.
  • Repayment capacity – Another important factor is repayment capacity. It makes a difference if a customer has a good credit score, to begin with. Furthermore, an applicant’s credit history, payment pattern, and income capacity are all taken into consideration.
  • Type of property – There will be an interesting change for properties that are commercial and properties that are residential. Also, in some cases, borrowers can collateralize their leased property. There will be higher interest rates in those scenarios.
  • Borrower’s background – It makes a difference in what kind of a person the borrower is. Whether they have a stage income, their residential area, their credit history, etc. Financial institutions note all these factors before making an interest rate offer.
  • Tenure of the loan – Another factor is the duration of the loan. The longer the loan tenure, the more interest the customer has to bear.

Types of Loan Against Property

Several different variants of a loan against property. Thee can be segregated into classes, including loans against property based on property type, based on borrower category, and based on purpose.

  • Loan against residential property – Here, loans are sanctioned with residential property as collateral.
  • Loan against commercial property – Financial assistance is provided for commercial property such as shops, malls, factories, etc. as collateral.
  • Loan against rentals – Leased properties can be put on the line as collateral to avail of a loan.
  • Loan against property for self-employed – A self-employed person can avail of a loan if they can show their repayment capacity and are aged between 25 to 70.
  • Loan against property for a salaried person – Salaried personals are also eligible for a loan who are aged between 25 and 70 and can prove their income stability.
  • Loan against property based on purpose – A loan can be sanctioned for an array of purposes such as education, wedding, debt repayment, second mortgage, etc.

Features and Benefits of Loan Against Property

Below are the features and benefits of Loan Against Property:-

1. Multiple Usage

Any kind of loan is a boon if you have an array of expenses to meet every now and then. From commercial to residential, you can even apply for a loan against agricultural land. This property loan pitches into meeting your financial errands which may involve expenses on weddings, studies abroad, medical emergencies, and even debt consolidation.

2. Lower Interest Rates

What makes a loan against property look easy on the head is the attractively lower rate of interest. The fact that Loan Against Property comes from the clan of secured loans, lenders barely have anything to worry about when recovering the amount. Even if you fail to repay the loan, the lender can easily bank recovery by legally claiming the collateral. It ends up facilitating interest rates your way with ease. Know that eligibility profile, repayment tenure, and loan amount play major determinants in Loan Against Property interest rates and can lower or increase them.

3. Large Loan Amount

A loan against property features a large number of sanctions for borrowers. In property loans, you avail the amount by pledging your property as collateral. Lenders offer an amount ranging up to 90% of the market value of the property you pledge. It usually goes up to Rs 15 crore, which is sturdy enough to handle your extra expenses. However, the amount you get is determined by several factors, including the type of property (residential or commercial), eligibility profile, and of course, your requirement. The lender also checks whether the property is occupied, rented, or vacant.

4. Repayment Flexibility

One of the must-know features (and advantage) of a loan against property is that it comes packed in the easiest of repayment tenure options. Banks and NBFCs offer a flexible time frame to borrowers for property loan repayment. This loan features tenure options ranging from 5 to 20 years. So, whether you seek a loan against commercial or residential property, you have a seamless way to settle the score.

Loan Against Property Eligibility Criteria

Lenders have certain eligibility standards that must be met to make your property loan application a success. The criteria include parameters such as age, employment, income, etc. Not keeping up with the eligibility criteria leads to a straightforward rejection. It is crucial that you are aware of the eligibility criteria set by the bank or NBFC you are seeking a loan against property from. Here is the loan against property eligibility criteria that is generally demanded to be matched:

Loan against property eligibility criteria for salaried individuals

  • You should be at least 18 years of age to be able to apply for the loan
  • Your age cannot exceed 60 years when tenure terminates
  • You must have all the documents required for loan application (PAN, Aadhaar Card, Address proof, etc.)
  • You should be employed in a private limited company, public limited company, MNC, Government or public sector company

Loan against property eligibility criteria for professionals and self-employed individuals

  • You should be at least 21 years of age to be able to apply for the loan
  • Your age cannot exceed 65 years when tenure terminates
  • You must have all the documents required for loan application (PAN, Aadhaar Card, Address proof, etc.)
  • Your business should have been active for at least 3 years
  • Your business should have declared profits for past two years

Loan Against Property Documents

Loan Against Property application demands that you provide the correct documentation. Only then do you become able to have it sanctioned. You must submit all the documents required by the lender in order to bag approval on your loan application. Here are the documents required for loan against property:

  • ID Proof – Aadhar Card, Voter’s ID Card, Passport, Driving Licence
  • Address Proof – PAN Card, Voter’s ID Card, Passport, Driving Licence, Utility Bills such as Electricity, Telephone, Water Bill
  • Income Proof – Salary Slips, Bank Statements, Form 16. In the case of professionals, a Balance sheet and profit and loss account, IT Returns, and Business Proof will be required.

Things to Keep in Mind When Applying for Loan Against Property

Before you make the final call on your loan against property hunt, we have got a list of certain checkpoints concerning loan against property that you need to consider before you head on to the application process. There is a myriad of checkpoints to keep in mind when it comes to the loan against property. It includes aspects like property value, repayment capability, and rate of interest. It is crucial that you know everything and decides your next step.

Here are the important points to keep in mind when applying for a loan against property:

Property Evaluation

The question arises of whether the property is residential or commercial. Because the lender also checks if it is occupied, rented, or vacant. Banks and NBFCs offer the loan amount playing from 70% to 90% of the current market value of the property. Therefore, it is necessary to check out the LTV.

Repayment Capacity

One should never take a large loan amount over your repayment capacity. Many banks offer up to Rs 10-15 crore as LAP amount and if your eligibility and CIBIL profile are all smiles with the lender’s requirements, then it should not be a problem for you to get this much amount sanctioned. However, never ever should you ask for more than what you can afford.

Duration

Loan repayment tenure usually ranges up to 5-7 years but when it comes to a loan like Loan Against Property, the timeframe becomes coolheaded. Loan against property repayment tenure goes up to 15 years which surely sounds good. Many lenders offer up to 20 years of the ease with repayment. Therefore, it is important to shop a bit (and more) around and look into the number of tenure years offered by different lenders in order to get the best deal out there.

Rate of Interest

Loan Against Property interest rate is one of the most important factors to consider for all the obvious reasons. Since this loan is sanctioned in exchange for your property as collateral, the lender charges quite a nominal rate of interest on it. Besides that, there are many other factors affecting the rate of interest on loans against property that you, not at any possibility, should overlook. These factors most importantly include your CIBIL score, loan amount, income, and your relationship with the bank.

Loan Against Property EMI Calculator

Loan Against Property EMI calculator is a tool that calculates the amount of EMI payable by you every month or year. The loan against property calculator requires you to fill in the total amount of loan, rate of interest, and months or years of loan repayment tenure. Using this loan calculator, you will know the amount that has to be paid to you, and it will enable you to handle your expenses and budget wisely.

How to Apply for Loan Against Property

There are two easy ways to apply for a loan against property- offline and online. Here is how to do that:

1. Apply for a loan against a property offline

To apply for a loan against a property using the offline method, all you have to do is make your way to the nearest branch of the bank or NBFC with all the documents. Throughout the application process, you will have assistance from the representative of the institution.

2. Apply for a loan against property online

Applying online has become the niche for any applicant interested in applying for a property loan. Here is are some tips on how to apply for a loan against property online.

  • Once you have shortlisted the lenders that suit your capacity and needs, visit their official website.
  • There will always be an option pertaining to their products.
  • Navigate to the ‘Loan Against Property’ option and click on it
  • Locate the ‘Apply for a loan online’ option.
  • You will be asked to fill in your personal details, create a login ID and password, and upload necessary documents related to your identification.
  • Complete the online KYC procedure.
  • You will get an email and message confirming your application.
  • Get in touch with the bank agent for more details.

Frequently Asked Questions

What are the rules for loans against the property?

The general rules to remember before getting yourself a loan against property include thoroughly determining your financial situation and needs, making use of prepayments to reduce loan tenure, making timely repayments, considering insurance in case of a larger loan amount, and carefully analysing bank policies.

Can I get a loan against property without income proof?

There needs to be a concrete reason why there is a lack of income proof since financial institutions rely heavily on the borrower's repayment capacity. Sanctioning a loan amount means lenders are taking risks on their capital, and a lack of income proof can be an obstruction.

Is there an application fee for a loan against property?

A processing fee will be involved in availing of a property loan. Depending on the financial institution, this will be somewhere between 1% to 2% on the loan amount.

Is it possible to apply for a loan against the property if it is a joint property?

One can apply for a loan against the property if it is joint property. Joint property is eligible for a higher loan amount since there are two accountable persons and banks are more than happy to provide a loan for the same.

How much loan can I get in loan against property?

In loans against property, lenders offer a loan amount ranging from 70% to 90% of the property's market value. The loan amount goes up to Rs. 15 crores and is determined by a group of factors including CIBIL, employment, type of property, and not to forget, the income profile of applicants.

Vimal Vijayan is a major in Philosophy with a background in Music, Artistry, Research, and Teaching. More often than not, he is as confused as a cow on an astroturf but oddly that's just his strategy for staying lazy. Also, he likes to play Chess. Fin.

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