A Guide to Loans Against Property in India: Benefits, Eligibility, Required Documents, and the complete process.

Loans Against Property in India

A loan against property is a loan granted against the mortgage of any type of property. Be it residential, commercial, or industrial property. In this, the borrower should declare the end use of the loan in the application form. The Loans Against Property in India are basically kept as collateral with the lender. When taking a loan, gaining the trust and confidence of the lender is essential. Mortgaging your property is a reliable option. When you mortgage your property with the lender, they will have better confidence in your business. When lenders trust your business, it is easier for us to compromise and reduce the rate of interest. This is one of the reasons why ROI for a loan against property is cheaper compared to any other type of loan.

Benefits of Loan Against Property

1. Lower Rate of Interest

The rate of interest for a LAP facility is considerably lower. It is because financial institutions are lowering their risk by taking a mortgage from you. The rate of interest of LAP will be around MCLR + 1% (or maybe lower in a few cases). ROI will vary depending on the profile of the borrower.

2. Tenure of the Loan

As compared to other loans, Loan Against property is provided for a longer period of time. The longer the tenure of the loan, the smaller will be the EMI. In LAP, the tenure may go up to 20 years. This will help the business to take the funds from a long-term perspective.

3. Low EMI

There is an inverse relationship between the tenure of the loan and EMI. Generally, the longer the tenure, the lower will be the EMI. As LAP has offered for a longer period of time, the EMI is comparatively lower than for other loans.

4. Many Financial Products offered

The borrower can use the property to mortgage and can avail of many lines of products. Right from project funding, a term loan to a working capital arrangement. Once the financial institution minimizes the risk with some kind of security, there will be many permutations and combinations set.

5. No Limit On Loan Amount

There are always limitations while raising the amount in an unsecured form. However, under a secured one as long as the financials of the company and the mortgaged offered support, the borrower can get any amount in debt form, with no restrictions on it. There are some sets of solutions that need to be arranged while raising the higher amount, but yes that can be definitely worked out.

6. Loan Prepayment

Generally, loans are taken with the intention to expand the business or face the tough financial conditions of the business. However, once the tough time is over or the targeted project turns into good cash flow, promoters can repay the loan amount and can even minimize the debt burden.

Learn more about the LAP execution process , Here.

Eligibility for Loans Against Property in India

1. Age Factor

An individual should be a minimum of 21 years of age and a maximum until 65 years of age in order to secure a loan against property. Some banks also consider a minimum age of 18 years and a maximum of 70 years.

2. Loan To Value Ratio

Banks typically look for an LTV ratio of 60% to 70% while dealing with loans against property. This ratio varies from one type of property to another. It is highest for loans taken against residential properties but the lowest for loans against commercial properties.

3. CIBIL Score

CIBIL stands for Credit Information Bureau India Limited. Banks and financial institutions give loans against property based on the market value or the registered value of the property. In case you have a low CIBIL Score , some financial institutions may give loans against property with a higher rate of interest or a higher margin.

4. The Tenure of the Loan

The tenure for which a bank gives Loans against property in India varies from bank to bank. Generally, banks give loans for 15 years against the property. But there are some banks that give loans against property for 7 to 9 years.

Steps to avail LAP facility

Every bank has a different set of processes for Loans against property in India. Here are some fundamental steps which usually every financial institution follows:

1. Check if you are eligible and calculate the EMI

We have mentioned some basic eligibility criteria above and there are specific eligibility criteria for each bank. Check the criteria and see if you are eligible for the loan. Calculate the approximate EMI that you would have to pay.

2. Check if you are eligible and calculate the EMI

Every bank has a different set of processes for Loans against property in India. Here are some fundamental steps which usually every financial institution follows:

3. Property and legal documents

The property against which you are taking a loan should have all the documents clean and ready. Some common documents asked for by financial institutions are Registered Sale Deeds, Past Sale Deeds Chain, the Latest House Tax Return, Approved Building Plans from Municipal Corporations, and so on.?

4. Explore Loans against property interest rate offers

After checking the documents, you can now research the interest rates and the different options available. There are usually fixed and floating rates. Fixed ones are generally a bit higher than floating ones.

5. Compare miscellaneous charges and loan parameters of the banks

Financial institutions charge various additional fees in addition to the interest rate. Be aware of all their extra fees like processing charges, prepayment charges, and so on and so forth. We at Terkar Capital can help you with this entire procedure.??

6. Other parameters

While finalizing the financial institution or bank do check the other factors involved like the turnaround time of the banks, quick loan delivery, transparency, and other parameters. Try to read reviews of existing and past bank customers in order to help you decide.

Evaluate your property with Terkar Capital

At Terkar Capital, we understand that navigating the world of finance can be overwhelming, especially when it comes to securing loans against property in India. That’s why we strive to make the lending process as transparent and personalized as possible.

Our team is made up of dedicated experts who work tirelessly to understand your unique financial needs and provide customized solutions that work for you. We prioritize fairness and always ensure that our clients receive a justified valuation of their property, which helps them get the best possible rates. We take pride in our reputation for providing lightning-fast turnaround times, allowing you to get the funds you need when you need them. And with the best interest rates in the industry, we ensure that you get the most competitive deals.

At Terkar Capital, we’re not just a faceless financial institution. We’re a team of real people who are passionate about helping you achieve your financial goals. So why not reach out to us today and let us show you how we can help??

Check the link to learn more about what documents are required to avail of loans against property in India.