You’ve come across this really amazing project idea you want to invest in, but this investment could burn a hole in your pocket. So, you thought of borrowing from your friends and relatives, or keeping some gold in the bank and procuring a loan against that, or even worse, you thought of picking a personal loan from your local money lender?
Do you remember the land you bought to build your summer house or as we say, the farm house? It’s been a year and there has been no progress on the land. Physical progress we mean. Otherwise the land has been quite progressive.
If you go through the property rates, they have reached the skies. No, we aren’t asking you to sell it off, it’s an investment after all. All you need to do is, visit a bank and apply for a loan against property.
In the further article, we shall guide you with the process of applying for a loan against property. But first let’s get to the pros and cons of it.
Why is it Good to Mortgage Your Property?
The one main reason why people usually do not opt for loan against property, or in the banking terms, mortgage their property, they have a certain kind of fear that the bank would take over their property in case they fail to pay the dues, which is completely fair. For a salaried person, you do not get any tax exemption on the EMIs you pay to the bank; but for a business man, should he be able to provide proofs that the entire money was used for expanding his business, then he can avail a tax exemption.
Now one may argue, that taking a loan against gold and other assets is easier and the interest rate are comparatively low as against property. But, if the amount that you require runs in lakhs, and you are investing the entire money into business, then loan against property is the best option, we suggest. As in either case, if you fail to repay the loan, the bank shall take charge of your assets.
Features and Benefits of Procuring a Loan against Property
- The feature we like the best is, you get higher loan amount, for a longer tenure and on easy EMIs. The benefit we see here- Bigger amount, but lower EMIs.
- Apart from the loan process being quick and hassle free, you have flexible repayment options that vary from bank to bank.
- Whether your property is residential or commercial, you still get a loan against it.
- For all our self-employed readers, you also get special benefits which vary bank to bank. Thus, you would need to visit your nearest bank to know about this.
Eligibility Criteria for Loan against Property
The points we shall discuss here are of a leading private bank, these may however vary if you go to a nationalised government bank or some other bank.
|Salaried individual||Self-employed professional/ individual|
|Residence Proof – A ration Card /Telephone Bill / Voters Card/ Electricity Bill||Residence Proof – A ration Card /Telephone Bill / Voters Card/ Electricity Bill|
|Identity Proof – A Voter’s Card / Employer’s CardDriver’s License||Identity Proof – A Voter’s Card / Employer’s Card Driver’s License|
|Your latest Bank Statement to show a salary / income being credited from the past 6 months||Latest Bank Statement to show an income being credited from the past 6 months|
|Salary Slip from the last 6 months, along with a copy of Form 16 from the last 2 years.||Certified Financial Statement for the last 3 years.|
|Copies of all documents related to the property that you chose to procure loan against.||Copies of all documents related to the property that you chose to procure loan against.|
How Can You Avail for a Loan Against Property?
It doesn’t matter if it’s a piece of land or a house or your commercial place, you can procure a loan against any of these, in a planned and easy way. In case there are more than one owners, then a consent from all the owners is mandatory; also, the property should be undisputed and clear in all government records. Most important thing is, the title of the property should be very clear.
You need to carry the above mentioned documents to the bank when you apply for a loan against property. The bank’s verification department shall validate them at their end and then begin with your loan process. The only catch is, the bank shall offer loan in various degrees depending upon your age and work profile. So, the amount would vary from bank to bank.
Through the credit information bureau they shall check your credit history, and then once you come out clear on their records, you can avail for a loan against property.