• Loan Against Property stands for the most secured term of the loan as the guarantee is a property.
  • This can be taken for
      • The loan of educating the child
      • Marriage
      • Business start-up, or
      • Any other personal reasons.
  • When any person comes up with an idea of loan they have two options either to opt for the loan against property or go for the personal loans.
  • As personal loan security is less, interest is higher, and also the amount of loan is less.
  • Loan against property is the most interesting area of loan taking by the borrower as by its lower interest rate.
  • Lending institution Interest for LAP ranges from 10% to 15%.
  • The collateral that you have mortgaged becomes a very dimensional bank product as the value of your property appreciates over time even when your loan depreciates.
  • However, the value of the asset can be used to generate cash flow by refinancing that mortgage.
  • It can be taken at
    • The lower interest rate
    • To shorten your loan tenure
    • To get the latest market value to finance a new purchase
    • For consolidating debt
    • For a conversion to a different mortgage plan.

The process to Refinance Loan Against Property

An assessment of your present mortgage

  • Contacting the banks to get adequate information about
    1. The different types of offers keeping in mind the ELR
    2. The moving cost whether it is partial or full
    3. To check if there is a lock-in period
    4. Evaluating all these and integrating it with your objective set earlier.
  • Negotiate for a convenient ELR succeeded by comparing all the offers by different banks.
  • Sign up.
  • The debt service ratio of your newly refinanced loan application will be based on a 10-year tenure.
  • Whereas the portion used to repay your existing mortgage will be based on your normal mortgage tenure that will 35 years.

Interest rates

  • The interest on the mortgage will be 4.4%
  • The cost involved will be:

Moving cost

  • The amount that you will have to spend on in taking up a new loan
    • Valuation fees
    • Legal fees
    • Disbursement, and
    • Stamp duty fees.

Mortgage lock-in period

  • When you are paying off your existing loan against property, check whether you are still bound by your lock-in period.
  • Banks normally charge interest of 2-5% for an early settlement that is if you are paying off within the first 2 years.
  • The top-up loan will always be an alternative, it is an additional loan on top of the existing mortgage.
  • Some banks may start a simultaneous account or just top it on the existing account.
  • Top up loan can only be done with the existing bank.
  • The bank will have the same conditions and terms as followed on the existing loan.

On which property the borrower can take a loan against property?

  • The residential property
  • Commercial Property
  • Industrial Property
  • It can be the property where you reside provided you owe it.
  • Rented property owned by the applicant
  • It can be a plot.
  • If can be a building on any economic means you are earning.
  • Any commercial building which is on rent is also eligible for the granting of the loan.

Who can avail of the loan against property?

  • A person should be a regular income holder, he should have the earnings.
  • He should have a property in his name.
  • The value of his property mortgaged will be taken into consideration during the calculation of the loan.
  • The person who has a good past repayment record of
    • Loans
    • Credit cards
  • Will judge whether the person to whom the bank is providing the loan will be falling under the list of goods consumers or not.
  • Any debt in past will be taken into consideration. Try to pay the interest on time without delay so that you can be counted in the good list of the bank.
  • The savings amount will also be taken into consideration. It is a normal agenda to be verified to see your KYC (know your customer).

Documents required to get a loan against property

  • You need to have an identity proof
    • Adhaar card
    • Driving license
    • Voting card, etc
  • You need to have the right of possession letter.
  • Your registry letter (property is in your name) by the tehsildar.
  • Your income statement. Which shows your earning.
  • Bank statements for the previous six months. If you are new to the bank then just the income letter and property ownership details will work.

Advantages of loan against property

  • Loan Against Property comes with a long tenure of 15yrs which can profitable with low EMI’s.
  • In LAP maximum and minimum margins of loan is good enough to have it in for a personal (Rs. 5, 00,000 to Rs. 5, 00,00,000). It depends on the valuation of the property.
  • In the application for loans usually, it is been charged as 65%of the value of your property.
  • Loan Against Property is a secured loan because of which the interest rates are lower than the other ones.

New measures to reduce the load of consumers

  • Now the online application has been started by the banks for the very same loan on property scheme.
  • It will definitely help people by various means of
    • Saving time
    • Money, and
    • Paperwork.
  • You need to check your
    • Eligibility whether the loan can be provided to you or not,
    • What will be the amount you are claiming against your property,
    • Tenure by which you will be returning the same.

Loans are the tricky part to go with when you need to risk your assets to grow the same, need to think a lot, and hence check all the details given by banks for the very same. Loans as before described will be in the form of two- personal and against property, for emergency need choose personal as because the amount paid is less and tenure to you can cover the deal, and if you want to do for the factors of marriage, education, start-up, etc. which are mentioned before do go for loan against property(LAP).

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