Loan against property is a mortgage loan provided by banks and non-banking financial institutions against the property of residential and commercial property based on the value of the property on the market rates. Typically, banks provide a mortgage loan for an LTV of 60%-70%. Know more about loan against property and its properties.
Know about the features and benefits of a mortgage loan:
- Age: The minimum and maximum age criteria for loan against property is 21 years and 65 years. However, some banks provide mortgage loans to individuals between 18 years and 70 years of age.
- Loan Tenure: Generally, banks provide loan against property for a tenure of 15 years depending on the age of the borrower. However, some banks do not give a mortgage loan for tenure more than 7 or 9 years.
- Net Monthly Income: The net monthly income required to avail loan against property differs for both salaried and self-employed professionals. In the case of salaried, borrowers must have a minimum income of Rs. 40,000 and self-employed individuals should have an annual income of at least Rs. 3 Lakhs p.a.
- FOIR: For a loan against property, Fixed Obligation to Income Ratio, starts from 60% and banks may also provide up to 65% of the value of property to salaried individuals in case the income exceeds Rs. 40,000.
- Loan to Value Ratio: The loan provided against the mortgage of property depends on the value of the property While banks generally offer mortgage loans for an LTV of 60% to 70%, it varies based on the type of property as mentioned below:
- For industrial property – 50 – 55%
- For residential property – 60 – 75%
- For commercial property – 60 – 70%
- CIBIL Score: If your credit score is below 650, then your chances of getting a loan against property at a lower rate of interest decreases. Thus, you can either apply for LAP with a different lender like NBFIs, or you may have to avail loan at a high-interest rate.
Are there benefits of availing loan against property?
- Lower Interest Rates: One of the most significant advantages of a mortgage loan is that as it is a secured loan; thus, financial institutions are ready to provide loans at lower interest rates. Further, you can easily fulfil your needs for funds requirement as loan amount can be disbursed up to 70% of the value of the property.
- No restrictions on end-use: Loan against property can be used to fulfil personal, and business needs such as the expansion of business, medical emergency, other expenses such as weddings etc.
- Utilise idle asset: Unlike a personal loan that has high-interest rates, loan against property is provided at a lower rate of interest. Thus, you can utilise your idle asset such as commercial or residential property to get funds at a lower cost.
Overview of Mortgage Loan Rates
|Minimum Interest Rate||7.75%|
|Processing Fee||Upto 1% of loan amount|
|Loan Tenure||Upto 20 years|
|Lowest EMI Per Lakh||₹ 821 for 20 years|
|Prepayment Charges||Nil charges
Conclusion: Thus, you can apply for a loan against property online by comparing LAP rates. Along with that ensure that you have carefully checked other charges like processing fees, prepayment charges etc. before shortlisting any institution. Also, don’t forget to check eligibility criteria based on your income and other parameters to get the best deal on your loans.