Financial setbacks or emergencies can strike at any moment. Then you might only have to rely on liquidating your investments or drain your savings to arrange for the necessary finances. However, there is an alternative route of availing a loan against property India to fund your expenses. A loan against property is a secured loan provided by financial institutions or NBFCs against your asset.
How loan against property work?
If you avail a loan against property (LAP), you’re eligible to receive a loan amount against the property value. Here the property is mortgaged with the lending institution as a guarantee. In the case of default, your lender will liquidate your assets to recover the outstanding dues. Loan against property interest rates is also lower than unsecured loans, making it an effective way to repay over an extended period.
You can avail a Loan against Property from leading NBFCs like Bajaj Finserv to meet your financial needs such as healthcare expenses, your child’s higher education, expanding business or meeting medical emergencies, etc.
Furthermore, you can enjoy zero charges on part prepayment and foreclosure facilities. The loan against property interest rate is also lower, making it easier for you to manage your expenses better.
Bajaj Finserv also brings you pre-approved offers on secured advances like home loans and unsecured credits like personal loans, business loans, among other financial products. These pre-approved offers streamline the process of availing finances and save time as well. You can check your pre-approved offer by providing a few necessary details.
Here are a few things to understand before you avail a loan against property
Evaluation of your property
A loan against property is provided on a wide range of assets like – residential, industrial, commercial or a self-owned property. If your property is co-owned, then the legal owners have to be joint applicants for the loan. Financial institutions or NBFCs sanction the loan amount after judging your property’s condition and legal status. Thus, you should know the loan against property eligibility criteria before you avail one.
Loan to value ratio
Financial experts advise comparing the loan to value (LTV) ratio offered by various lenders before choosing a preferred one. You can avail up to 70% of your property’s present market value depending on the variations in the LTV evaluation criteria of different financial institutes or NBFCs.
EMI, tenor and interest rates
If you’re applying for a LAP, you can use the lender’s financial calculator to evaluate loan against property interest rates, EMIs based on your loan’s repayment schedule, etc. Also, compare the repayment tenor, which ranges from 5 years to 20 years, depending on the sum borrowed and EMIs. Although higher tenors will demand lower EMIs, the interest paid will be higher too. Consider your current and future financial liabilities before you choose the tenor.
There are a few criteria that are considered by lenders like –
- The borrower’s existing debts
- Repayment record of previous loans
- The current value of the mortgaged property etc.
- Lending authorities also determine the borrower’s financial position, age, employment status, and the credit score before a LAP is sanctioned.
Loan against property documents required are –
- Duly filled loan application along with your recent passport sized photograph.
- Residence proof.
- Photo identity proof.
- Last 3 months’ salary slips, previous 6 months account statements and previous 3 years of ITR for salaried professionals.
- For self-employed individuals – proof of business existence, educational qualifications, account statements for last 6 months, last 3 years of ITR and profit and loss statements and balance statements for the last 3 years.
Loan against property India provide substantial loan amount and lower interest rates.
A LAP can also help you consolidate all your existing debts as you can utilize the funds available to repay your existing debts. It is an ideal financial product cut out for diverse funding requirements to overcome your economic challenges. Refer to top lenders for the most beneficial terms and features.