A loan is a scheme that is common among the general public. Individuals take up loans because they require money to fund a trip with the family, to buy their dream car, for further education or even medical emergencies. There are various types of loans Car loans, Home loans, Gold loans or even Loans against a property. A loan against property or (LAP) is a type of loan that is issued against an asset or property as collateral. The asset, in this case, could be a home, land or any other commercial space. These are kept in as collateral until the borrower can fully repay the borrowed amount. Since it requires collateral, it belongs to the secured loan category. It is also called “mortgage loans”.
A loan against property provides a large sum of money at low-interest rates and long tenures. While home loans are restricted in certain factors, loan against property is flexible according to the borrower. The lender has ownership of the property until the borrower repays the borrowed loan. The borrower should get the property evaluated before they put it as collateral. If you have been searching the internet looking for an answer for “ can I get loan against property?”, then we are here to guide you through the process.
Features & Benefits of Loan against property
Before we understand the process of how a borrower can apply for a loan against property, let us first know the features and benefits that are provided.
Features of loan against property
- The lender usually lends 60% of the market value of the property rates. The loan amount can range from 10 Lakhs to 7.5 crores.
- The rate of interest is attractive and competitive along with long term tenures.
- Payments are mostly done through EMI’s.
- It requires minimal documentation.
- Your age should be between 21 years to 65 years.
- Both salaried and self-employed can apply.
Benefits of Loan against property
- The tenure provided by the lender can be up to 20 years.
- It can be issued on any property whether that is residential or commercial.
- The interest rates are low as 11%.
- Property is the only collateral.
- The entire process is hassle-free and quick.
Eligibility of loan against property
There are a few points that make a person eligible to be an applicant for this kind of loan. The eligibility criteria are given below.
- You must own the property or have a direct share.
- The annual net income should be at least 3 Lakhs.
- The maximum age limit is 70 years.
- If you are working as a salaried employee, can apply for this loan. Your age has to be in between 33 years to 58 years. Public or private sector.
Different types of property loans
A loan against property has different forms and types. It is based on 3 different categories based on property, employment and usage. Here are a few of the loans explained in detail.
Residential property
This kind of loan can be issued against residential property owned by the applicant. It could be self-occupied, vacant or put up for rent.
Commercial property
This loan is borrowed by the applicant when they have an industrial unit or office space.
Lease/Rental
The borrower can issue this loan for a property that has been put up on lease. This is a very popular type of loan scheme.
Loan against property uses
Here are some of the use cases for loan against property:
- You can avail of this loan to cover tuition fees, travelling expenditure or even accommodation charges.
- To cover the charges that occur in marriage preparation.
- If you want to get rid of multiple payments or related debts alike.
How to apply for a loan against property?
Now that we have understood what a loan against property scheme is let us have a look into the mandatory steps related:
Conduct a thorough research
Before deciding on a lender, make sure to conduct a thorough survey of the lenders in competition. Do cross-check interest rates, tenure available and other charges. Like processing fees, statement charges, prepayment charges available.
Search for the maximum loan amount provided
Once satisfied with the chosen lender, do consider the maximum loan amount you can derive. The loan amount depends on factors such as the current market value of the property, your income and repayment eligibility.
Consider the eligibility criteria
The eligibility criteria vary from lender to lender. Do provide authentic documents as proof for the same.
Apply through the official website or branch
You can either apply online using the official website of the bank or NBFC. or visit the nearest branch of the same. The application process to apply for a loan against property online consists of a few simple and quick steps.
- Go to the website of the lender.
- Search for the “Loan against property” option.
- Then fill up the documents and data asked.
- The lender, if he sees fit, will then approve the loan amount.
- You will receive it eventually.
The top banks that provide the best offers in loans against property schemes
Here is a list of the top banks that provide quick loans against property in a hassle-free manner, carry on with the reading task to know more:
SBI Bank
SBI Bank is a multinational banking and finance company. It is a public sector company. The bank offers a great offer for loans against property. The bank offers a rate of interest starting from 8.45% to 10.00% p.a. and the tenure ranges from 3 to 15 years. The processing fees given are 0.50%.
HDFC Bank
HDFC Bank is the largest private sector bank in the banking and finance industry. It offers a great deal of rate of interest starting from 8.00% to 8.95%. The tenure offered by the bank goes up to 15 years. The bank charges processing fees of a maximum of 1% of the loan amount. The prepayment charges are maximum of 4% of the operating amount.
Axis Bank
Axis bank is also Indian banking and finances company. The bank offers 7.90% to 9.30% as a rate of interest. The tenure offered by the bank is up to 20 years. The bank doesn’t charge a processing fee for the customer who belongs to the micro or small economy category. It charges a processing fee of 0.50% to the general category.
ICICI Bank
ICICI bank is one of the most trusted banks in India. It provides a rate of interest of 8.35 % to 10.00%. The bank allows a tenure of up to 15 years. The processing fees charged by the bank is 0.50%
Kotak Mahindra
Kotak Mahindra bank ranks in the top 10 list of banks that offer a great deal on loans against property. The range of interest rate starts from 9.5 % onwards. The tenure lasts up to 15 years. The bank charges a processing fee of 1.00%
The loan against property is a highly reliable type of loan after personal loans because of the flexibility they offer. The borrower decides the tenure of the loan and chooses the interest rate they are comfortable with. It offers a wide range of options in terms of purpose, eligibility, tenure and even loan amount. Apart from banks, there are a variety of NBFCs that provide loans against property.
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