Complete Guide – Criteria For Obtaining Loan Against Property In 2022
There might be times in your life when you will face a financial crunch. For example, you may need cash for business growth, your children’s higher studies, medical fees, or marriage. It is not always possible to pay for these expenses with credit cards. In such cases, loans against property can come in handy.
The application process for this loan is quite simple, with basic conditions and fewer documents. Before applying for a loan against property, you must fully understand the process.
What Is A Loan Against Property?
A loan against property, as the name says, is a loan in which you use your property as collateral. It might be your home, a plot, or an office.
When you need money for personal reasons, obtaining a loan against your property can be very beneficial. You can take out a loan for a larger sum for a longer length of time. This will provide convenience when it comes to meeting all of your needs.
What Documents Are Needed For a Loan Against Property?
The documents required for a loan against property are listed below:
- Latest salary slips for salaried people
- Bank account statements for the last 3 months
- PAN Card
- Aadhar Card
- Address Proof
- Property Papers
- IT returns for salaried people
What Are The Eligibility Requirements For A Loan Against Property?
You must meet certain qualifying requirements if you want to take out a loan by keeping your property with the bank. The eligibility for a loan against property varies from lender to lender and may not be the same for everyone.
However, some things remain the same across institutions:
- You should be a citizen of India.
- You must be between the age of 28 and 58.
- You should be employed in the public or private sector.
- If you are self-employed, you should be able to provide proof of income.
What Is The Interest Rate On a Loan Against Property?
As the paperwork differs for the various banks and lenders, so do the interest rates. However, the average interest rate on loans against property is between 9.8% and 16.5% each year. It also depends on the CIBIL scores at the time of the loan application. You can get a lowered interest rate if you have good credit, and vice versa.
What Is A Loan Against A Property Eligibility Calculator?
With a loan against property calculator, you can check whether you are eligible for a loan against the property. This calculator will help you know your eligibility status in various cities in India.
To give you an idea, your bank or lender will look at your property value and how you will repay the loan. It will also check your total assets and liabilities, age, qualification, number of dependents, and your spouse’s income.
Based on this information, your bank or the lender will decide if your application can be approved or not.
How Do You Repay a Loan Against Property?
Repaying a loan against property is similar to repaying a home loan. Your bank or lender will calculate the principal and interest amounts and your monthly EMIs. These EMIs can be paid on the same day each month and are automatically taken out from your bank account. The EMIs begin the moment the loan is transferred to you.
What Are The Features And Benefits Of A Loan Against Property?
The following are some of the features and benefits of taking out a loan by keeping your property with the bank:
- The loan is given at a lower interest rate.
- The repayment period is quite relaxed.
- The loan amount also varies depending on whether you live in a metro, urban, or semi-urban area.
- You also get an option to deposit extra money and save on interest.
- It is a very good way of increasing property value.
- Many banks also provide balance transfer services to help you change banks easily.
How Can You Apply For A Loan Against Your Home?
Applying for a loan against property is easy and simple. The most important thing is to double-check that all of your paperwork is correct. The bank or lender will have no trouble approving your loan if your documentation is in order.
To apply for the loan, follow these steps:
- Fill out the loan application form completely and carefully.
- Include passport-size photos.
- Provide all documents requested by the bank or lender.
- To begin the application process, submit the forms and papers.
What Factors Should You Consider Before Applying For A Loan Against Property?
Keep the following points in mind if you want your loan to be approved:
- Property should be free of disputes
Always ensure that the property on which you intend to take the loan does not have any pending disputes. The loan may be rejected otherwise.
- The Loan amount must be manageable
You are the best person to decide whether or not you can pay the EMIs. So, before you apply for a loan against property, carefully check your finances to see if you can repay the bank on time.
- Choose an appropriate loan tenure
When applying for a loan, use the loan against the property calculator to check how much you can afford to pay back in a specific amount of time. If you believe that amount is more, increase the tenure and lower the EMIs.
- Check the value of your home
It is vital to examine the value of your home before applying for a loan. The majority of banks offer 60% of the property’s worth as a loan. Appraising the property beforehand will help you determine whether the loan is suitable for you or not.
Final Thoughts
Borrowing a loan is a decision that demands a lot of thought. Always weigh your choices before making a decision. It would help if you also compared the interest rates and benefits of various banks and lenders.
To learn more about loans against property, visit Piramal Finance and read similar blogs.