Which are the Best Banks to get a Loan Against Property?

When a financial emergency strikes, taking a loan is the best option especially when you don’t have enough savings or investments. Although a personal loan is a popular choice among many borrowers, the interest rates can be higher than all the other loans. Is there a better option to get a low-interest loan? Yes, certainly! Not many are aware that their properties can be used as collateral to get a loan.

Loan against property is a secured loan that is offered by pledging your self-occupied, residential or commercial property. The loan amount will be determined based on the value of the property. Interest rates on a loan against property are generally lower as the lender has the advantage of your property. The loan amount will be recovered through auctions in case you fail to make entire repayments as agreed before.

What is the Eligibility Criteria to avail a Loan Against Property?

As a loan against property is a secured loan, it is easier to obtain. Although the eligibility criteria may vary across lenders, the parameters remain the same.

Age

The age limit for a loan against property may range between 18 to 70 years.

Credit Score

It is recommended that you maintain a positive payment history and a good credit score. Credit profiles with negative issues can result in a loan rejection.

Employment

All salaried and self-employed individuals are eligible to avail a loan against property. However, the internal policies with regard to minimum income requirement may vary from lender to lender.

Some lenders allow only Indian residents to avail the loan and NRIs may not be eligible for it. You can check with the bank to know more about the eligibility criteria.

Features of a Loan Against Property

It is important to be informed about the features of a loan against property in order to grab the best deal. Although the features may vary among the lenders, they can be generalized as follows.

Loan Amount

You can get as high as 70% of market value of the property as the maximum loan amount. However, this depends on the lender’s internal policy.

Repayment Period

The tenure on loan against property ranges between 5 to 15 years. The borrower can choose between lump sum or an overdraft facility.

Interest Rate

The interest rate on loan against property generally ranges between 9% to 15%, depending on the borrower’s past repayment record and income level.

You can mortgage a self-occupied or commercial property, or it can be a piece of land. However, it is important to ensure that the property is free from any legal issues and have all the necessary documents.

What are the Documents Required

The documents to be submitted may differ between salaried and self-employed individuals. Following are the documents required to avail a loan against property.

For Salaried

• Proof of residence: Ration Card, Telephone Bill, Voter’s ID, Driving License, Electricity Bill, etc.
• Proof of identity: Voter’s ID, Employer’s ID, Passport, etc.
• Latest salary slips of last 3 to 6 months
• Bank statement of last 3 to 6 months
• Documents of the property to be mortgaged
• Form 16 for the last 2 years

For Self-Employed

• Proof of residence: Ration Card, Telephone Bill, Voter’s ID, Driving License, Electricity Bill, etc.
• Proof of identity: Voter’s ID, Passport, etc.
• Certified financial statement for the past 3 years
• Bank statement of last 3 to 6 months
• Documents of the property to be mortgaged

Apart from the above-mentioned documents, certain may ask for more if required.

Which is the Best Bank to Get a Loan Against Property?

We live in a world where we want to secure the best deal that fits our requirement. You may begin to wonder which lender would offer you the best deal on your property. Choosing the best lender depends a lot on your credit profile and relationship with the lender.

Most public sector and commercial banks offer the best loans to individuals based on their credit score. Interest rate on the loan against property is fixed according to the credit score. If you have a credit score of 750 and above, you are likely to secure the lowest interest rate for the loan. Low credit score is likely to get higher rates on the loan as the lender may assume a risky borrower.

Your relationship with the lender matters a lot. If you have a savings account, credit card or borrowed before from the lender, you may likely garner a better deal on the loan against property. The lender may not want to lose a valuable customer like you.

The interest rates on a loan against property may vary between a salaried and self-employed individuals and professionals. The salaried section may enjoy a lower interest rate than the other.

Following are the interest rates offered on loan against property from some of the popular lenders in the country.

The above-mentioned interest rates are indicative, and it is bound to change as per the lenders’ internal policies. For the latest interest rates on loan against property, you may contact the bank directly.

What are the Uses of a Property Loan

Primarily, a loan against property has a lot of advantages over all other loans as it is offered at a low interest rate. A property will be worth a huge amount of which a certain percentage of amount can be obtained as a loan. Huge amount can help you finance your wedding, education, business development, house renovation, etc.

A loan against property is a big ticket loan, and it can be put to a great use only when you need a huge sum of money for a major accomplishment.

How Can you Apply for a Loan Against Property?

A loan against property can be applied online or by visiting the nearby branch. The first step would be to check your eligibility for the loan. Once you are confirmed your eligibility, you may keep all the necessary documents ready and apply online. After submitting the application, the bank officials will approach for further verification and documentation process. The loan amount will be disbursed to your account after the approval.

Conclusion

A loan against property is also a viable option for people who own a property and are in need of a huge sum of money. The borrower must remember that the property is at stake if the repayment is not made consistently.