A loan against property is a long-term loan secured against a mortgage. The mortgage is usually a house or a plot of land, documents of which remains with the lender until you repay the loan in full. It is a form of mortgage loan, with a transfer of interest from the borrower to the lender on the subject of complete loan repayment. Inability to repay the loan amount in full will cause a default and allow the lender to liquidate the property to retrieve the funds.
Loans against property do not come with any end-user restrictions. You can use the funds availed for any purpose. For a mortgage loan instant approval, you have to ensure the following:
- Satisfy The Mandatory Eligibility Criteria
Salaried applicants need to be between the ages of 33 and 58 years and employed with an MNC or public/private company to apply. Self-employed customers need to be within the ages of 25 and 70 years and have a steady source of income to satisfy the loan against property eligibility criteria.
- Make Sure To Provide All The Necessary Documents
The loan against property documents required to apply:
- Photocopies of the property to be mortgaged.
- KYC documents (PAN or Aadhaar).
- Address proof (Latest electricity bill, telephone bill, post-paid mobile bill, municipality tax receipt, credit card statement, any KYC document with your permanent address, etc.).
- Income tax returns.
- Bank account statement of the previous 3 months.
- Latest salary slips.
Self-employed applicants may have to provide relevant documents for a loan against property instant approval.
You must also avoid these things when availing loan against property:
- Not Choosing The Right Loan Amount
You can avail up to Rs. 3.5 Crore with a loan against property. However, the loan amount you are eligible for depends largely on the market value of your house.
Lenders calculate the loan to value (LTV) before sanctioning the loan. LTV is the ratio between the loan amount and the market value of your house. An 80% LTV means you avail 80% of your property value as the loan against property in India.
A higher LTV makes the loans riskier for a lender. They may not avail the full cost of loan when liquidating the property in case you default. In such cases, they might charge a high rate of interest.
On the other hand, a low LTV also decreases the rate of interest, makes your EMIs affordable, and increases the chances of a quick approval of your loan against property.
- Not Selecting The Correct Tenure
Tenors of these loans can stretch over 20 years. Longer tenors keep the EMIs low since these are high-value loans. However, a longer loan against property tenure increases the total interest payable as well as the cost of loan.
Suppose, you have availed a loan against property of Rs. 50 Lakh at 11% rate of interest. Your EMIs and cost of loan will be Rs. 51,000 (approx.) and Rs. 1.23 Crore (approx.) respectively if you choose a 20 year tenor.
Similarly, your EMIs and cost of loan will be Rs. 56,000 (approx.) and Rs. 1.02 Crore (approx.) respectively if you select a 15 year tenor.
Hence, choosing the right tenor is of utmost importance. Use a loan EMI calculator to pick the correct tenor and check your EMIs and total payable interest.
Some loan against property features you can avail include:
- Balance Transfer Facility
You can transfer the balance of your loan against property to another lender offering a lower rate of interest. Availing this facility helps you to enjoy lower EMIs.
Your current financial institution may charge a fee if you are on a fixed rate of interest rather than a floating rate of interest. But you must have the knowledge of Fixed vs Floating Interest Rate impact on charges.The new lender may also charge processing fees, stamp duty, incidental charges, technical charges, legal charges, valuation charges, Memorandum of Deposit of Title Deed (MODT), etc.
Hence, make sure to go through the terms and conditions and use a loan against property balance transfer calculator to check how much you stand to save from the lower interest rates.
- Top-up Loan
Some NBFCs like Bajaj Finserv provide a high-value Top-Up Loan when you avail their balance transfer facility. You can use this loan for any purpose and streamline your finances for the new EMIs of the coming months.
Bajaj Finserv also brings pre-approved offers that help you save time when availing loans by simplifying the process. These offers are available on home loans, unsecured credits like business loans and personal loans, and a list of other financial products.
Satisfy all the conditions to ensure loan against property instant approval when you apply. Also, make sure to compare the rates of interest and charges before you apply.