Exploring Loan Against Property: Key Features & Benefits

Loan Against Property (LAP), often referred to as a mortgage loan, serves as a flexible financial instrument by utilizing residential, commercial, or industrial properties. Unlike unsecured personal loans, LAP provides unique benefits, making it favored for personal and corporate financial needs, except for speculative uses. Banks and Housing Finance Companies (HFCs) offer LAP for terms extending up to 20 years, with loan amounts potentially 75% of the property's market value, depending on the lender and borrower's credit profile. Additionally, Lease Rental Discounting (LRD) allows loans against rental income.

Features & Benefits of Loan Against Property:

• Lower Interest Rates: Due to its secured nature, LAP features reduced interest rates, mitigating lending risks for banks and Non-Banking Financial Companies (NBFCs), thus more advantageous compared to unsecured loans.
• No End-Use Restrictions: Funds from LAP can be allocated for various purposes such as high-interest debt consolidation, wedding costs, business growth, etc.
• Extended Loan Tenure: Enables terms of up to 20 years, facilitating reduced monthly payments and better financial planning for borrowers.
• Increased Loan Amount: Financing can reach up to 70% of the property's value, providing substantial capital for significant financial demands.
• Improved Loan Approval Odds: Secured by property, the loan poses less risk, enhancing approval chances.
• Overdraft Facility: Avail an overdraft on LAP for enhanced liquidity, supporting short-term financing needs.

Loan Against Property Interest Rates from Top Banks & HFCs:

• Bank of India: 10.10%-12.60% (Proc. Fee: Up to 1%, Rs 5,000 - Rs 50,000)
• Bank of Baroda: 10.85% - 18.60% (Proc. Fee: Up to 1%, Rs 8,500 upfront - Rs 75,000)
• Bank of Maharashtra: 10.45% - 11.95% (Proc. Fee: 1%)
• Federal Bank: 12.60% onwards (Proc. Fee: 1%, min Rs 3,000)
• HDFC Bank: 9.50% - 11.00% (Proc. Fee: Up to 1%, min Rs 75,000)
• ICICI Bank: 10.85% - 12.50% (Proc. Fee: Up to 1%)
• IDFC First Bank: 9.00% - 16.50% (Proc. Fee: Up to 3%)
• Indian Bank: 10.00% - 12.75% (Proc. Fee: 1%)
• Indiabulls Housing: 9.75% onwards (Proc. Fee: 1% onwards)
• Kotak Mahindra Bank: 9.50% onwards (Proc. Fee: Up to 1%)
• L&T; Housing Finance: 9.50% onwards (Proc. Fee: Up to 2%)
• LIC Housing Finance: 9.50% - 11.55% (Proc. Fee: Up to 1%)
• PNB Housing Finance: 10.40% - 12.75% (Proc. Fee: 0.75%, max Rs 1 lakh)
• State Bank of India: 10.00% - 11.30% (Proc. Fee: Flat Rs 10,000)
• Tata Capital: 9.00% onwards (Proc. Fee: Up to 1.25%)
• Union Bank of India: 10.45% - 13.10% (Proc. Fee: Up to 1%, min Rs 5,000 & max Rs 1 lakh)
• UCO Bank: 10.85% - 12.00% (Proc. Fee: 0.50% up to Rs 2 lakh)

Note: Rates are as of 24 June 2024 and may vary.

Eligibility Criteria for Loan Against Property:

• Residential Status: Resident Indian and NRI
• Minimum Age: 18 years
• Maximum Age: 70 years
• Employment Type: Salaried, Self-employed Professional, and Non-Professional
• Minimum Salary: At least Rs. 12,000 per month
• Net Annual Income: At least Rs. 1.5 lakh per annum
• Work Experience: At least 1 year with the current employer
• Loan-to-Value (LTV) Ratio: Up to 75% of property value
• Credit Score: Preferably 750 and above
• Property Type: Applicable for residential, commercial, industrial properties, considering age and condition.

EMI Calculator for Loan Against Property:

Prior to LAP application, use an EMI calculator for assessing affordability. Paisabazaar's EMI Calculator offers on-the-spot calculations, detailing total interest, principal payable, and the loan's amortization schedule for an informed repayment plan.

Documents Required for Loan Against Property:

• Proof of Identity: Passport, Voter ID, Driving License, PAN Card
• Proof of Residence: Ration card, Telephone Bill, Electricity Bill, Rental Agreement
• Proof of Age: PAN Card, Passport
• Proof of Income for Salaried: Form 16, Latest Payslips, ITR of past 3 years
• Proof of Income for Self-Employed: ITR of last 3 years, Business License, Balance Sheet
• Property Documents: Title Deeds, Encumbrance Certificate, Approved plan if applicable
• Refer to the lender's specific requirements for a comprehensive list.

Processing Fees & Charges:

• Processing Fees: 1% - 2% of the loan amount
• Part Prepayment Charges: Floating: Nil; Fixed: Up to 4% on principal
• Foreclosure Charges: Floating: Nil; Fixed: Up to 2% on principal
• Penal Interest: Typically 24% annually (2% monthly on overdue)

How to Apply for Loan Against Property on Paisabazaar.com:

1. Enter details like mobile number, loan amount, and property location.
2. Compare and select offers.
3. Paisabazaar loan experts provide guidance through the application.

Conclusion:

A Loan Against Property (LAP) provides a means to utilize property value for substantial financial goals, offering benefits like lower interest rates, extended tenure, and higher loan amounts, suitable for personal or business purposes. Understanding eligibility, documentation, and fees ensures a seamless application process. An EMI calculator aids in financial preparedness for your loan, whether for debt consolidation, business expansion, or covering personal expenses.