We all need money to fulfill our needs on a daily basis. While the regular expenses can be met with the earning we have, it becomes difficult to spend for other requirements. Life has become a struggle in today’s world and it is very difficult to meet ends and survive especially in such an inflated market. It is necessary to get some extra help to meet our needs which are many. So let us understand how to get this extra help to get our lives rolling in full pace.
Ways to get money
There are many kinds of help that can be availed in today’s fast paced life. Selling unused property, putting it up for rent or taking a loan against it can be some ways to get money for our necessities. If you wish to buy a property, you can avail a loan from the bank and keep it as collateral. But what if you need cash for some requirements? You will need to keep collateral which needs to be equal or more than the amount you wish to avail. You can get the loan against property from any banks or financial institutions with ease. Just enroll yourself and get the paper-work done to avail of the facility.
Need of the cash
You may need cash for many reasons such as for funding higher education for your children, or for the marriage of children. You may also need it to expand your business or get rid of a long ongoing loan. All such reasons are the most common one ones when you start finding different avenues to get cash. The easiest way to raise funds is by taking a loan against property as it can help your needs and keep your property intact. Building a new property in today’s times is not a joke. It takes a lot to do so and when you already have one, it would be foolish to sell it for a requirement which can be fulfilled with a small loan.
What is Loan against Property?
It is as simple as the terms mentions. Loan against a property for an X percentage. This percentage is usually around 40% to 60% of the property market value at that point in time. It is a secured loan as the borrower is securing the loan with his property. The reasons can be any of the ones mentioned above. There are certain properties that can be mortgaged for a loan. You may loan any property which is self-occupied by you or is rented in a residential area.
Eligibility Criteria for a loan
There are a few parameters that are gauged by the banks and financial institutions. Let us look at them in detail.
•Any property which is free from any kind of debt or legal implications and obligations.
•Your current income and investments for the return of loan against property.
•Valuation of the property for the amount that needs to be availed by the borrower.
•Your credit score based on the other repayments done for your loans and credit cards.
Interest Rate and Loan Tenure
Every loan that you apply for from the banks and financial institutions comes with an interest rate which needs to be paid by the borrower. The interest rates are usually around 12% to 16% depending on the tenure and the amount of the loan. The tenure can be anything from one year to 15 years on the requirement and the repayment capacity of the borrower.
Difference between loan against property and a Personal Loan
This loan against property is completely different from a personal loan. The basic difference is listed below.
•In a personal loan, you need not keep any collateral which is mandatory in loan against property.
•It is the cheapest loan after home loans whereas the personal loan is around 16% to 21% which is the highest in any loan category.
•The EMI is lower as the interest rate is cheaper which makes the Loan against property a goo option.
•Eligibility of the loan is high depending on the market value of the loan.
•Loan tenure of the personal loan is just 5 years on the higher side whereas for Loan against property it is 15 years.
•Loan against property is a secured loan whereas the Personal Loan is an Unsecured loan.
Documentation for a Loan against Property
Usually, the documents are common for all banks and financial institutions but it may vary a little depending on the requirements. All your financials and the personal KYC documents are mandatory to confirm that you are a citizen of the country and you have a stable income proof.
Once all this is updated and submitted the banks and financial institutions start the procedure to verify all the documents and the value of the property. You are then given the details of the same and the loan is approved for the amount as decided by the banks and financial institutions.
To be specific, the documents required are mentioned.
Salaried employee
•For salaried employees you will need an identity proof which may be any of the following- Voter ID card, Driving License, PAN card, Photo credit card, Employee ID card, Defence/Government ID card
•For income proof, you will have to produce latest statements of the salary slips showing all deductions. Form 16 in case of no latest statement
•Recent salary slips
•Last six month salary credit proof
•For residence proof, you may submit any of the following- Statement from your bank, latest bill of electricity or mobile or telephone, latest credit card statement, LIC premium receipt, appointment letter with residence address, latest NSC, rent agreement
•A form of guarantor which is not mandatory
•A copy of agreement of lease in case of any discounts
Other Applicants
•For identity proof, produce any of the following- Voter ID, Driving License, PAN card, and photo credit card
•For income proof, he or she needs to show IT return of two consecutive years
•Income certificate certified by a reputed CA
•Bank statements of last six month
•In case of residence proof, statement of bank, latest bill of electricity, mobile or telephone, latest statement of credit card, latest receipt of LIC policy, Latest NSC and Any government certified form that has the residence address
•Any government certified form that has the residence address
•Form of a guarantor which is optional and lease agreement in case of discounts
This is the standard list of documents required. It may vary from one bank to another.
