Basic things to know about loan against property
Loan against property helps in getting immediate access to funds by placing your property as collateral. It’s a long repayment term with a low-interest rate that makes it a popular choice.
Loan against property can be gained by mortgaging the personal or commercial property with the lender.
Below are the reasons why the loan against Property management program has emerged as a popular funding option:
Secure high loan amount with extended repayment tenure
You can secure a high amount of loan against your property and take advantage of long repayment schedule by repaying the loan on a monthly basis. It helps in reducing additional strain on you.
Multipurpose use of the loan
The loan amount can be used for any purpose. The purpose can be for personal use like marriage expenses or for setting up business or business expansion. You can also buy a new property from the loan amount.
Loan for business and salaried person
Loan against land can be used by both a business professional and a salaried person. There are no restrictions as such.
Below are some of the features of the property mortgage loan:
Eligibility
The amount of the loan against property is decided against the value of the property along with your income. Unlike the unsecured loans were your present income alone is taken into consideration. Your age and past credits will also determine the repayment terms and loan amount.
Documentations
Submission of property valuation document is required along with application form, proofs of address, id and income. Always make sure that you give the correct information in the application form, the lender will always verify the provided information’s.
Processing of loan request
With the lender satisfied with regards to the loan repayment capability, verification of the property will be done by the lender for the property mortgage loan. A field visit will be done by the lender to assess the property which will be taken as collateral for the loan against land.
Cost of the loan
Apart from the loan interest, the lender may add processing fees, stamp duty and other charges on loan against property.
Disbursement of loan
Once the loan is sanctioned, it is disbursed depending on the amount of the loan. The loan can be paid at once or in instalments over a while.
Repayment of loan
Generally, the repayment tenure of loan against land is 15 years. In case of prepayment of the loan, prepayment charges are charged as per the interest rates.
Transferring loan
During the loan tenure, you have the option of moving the loan from the existing lender to the new lender, if it is under the loan term. This will involves prepayment of the current loan against property followed by applying for a new mortgage with the new lender.
Do a calculation of the costs before a loan transfer. Loan transfer may not lead to any savings due to prepayment charges of previous loan and fees of the new loan.
