A loan against property has presented individuals with an unique borrowing option. It offers the restriction-free usage facility of some unsecured loans and affordable interest and extended tenor available typically with secured loans. Owing to these features, loan against property in India witnessed a growth of 20% in H1 2021.
Regardless of the city of residence, individuals can collateralise their property and avail a substantial loan amount. Nevertheless, to streamline the process, they should know its features and benefits in detail and leverage them.
6 notable features and benefits of loan against property
Zero end-use restriction on property mortgage loans is one of the best advantages of availing this credit. Besides, a loan against property also entails a host of benefits that individuals need to know.
- Affordable interest rates
Although individuals can utilise the funds for any financial requirements, the property loan interest rates are affordable due to collateral. However, the interest rate varies with lenders. They offer this rate after assessing a borrower’s credit profile and also property details.
For instance, the self-occupied residential property promises better rates than commercial ones. However, it is imperative for borrowers to compare the offers from different lenders to acquire the best deal available.
- Easy-to-meet eligibility criteria
Like other secured credits, a property mortgage loan also accompanies simple eligibility criteria. Although it varies with lenders, the following are some basic loan against property eligibility criteria that individuals need to fulfil:
- Must be residing Indian citizens who own property in this country
- Age should be from 28 to 58 years (salaried) and 25 to 70 years (self-employed)
- Should have steady income sources
Besides, individuals should also submit a list of documents to be eligible for this credit. With the right eligibility, individuals can also negotiate for better interest rates on this credit.
- Substantial loan corpus
Since the fund is available against a high-value asset like property, individuals can avail a substantial amount. Typically, lenders offer almost 60% to 75% of the property’s current valuation as a loan.
However, the LTV of a loan against property depends on the applicant’s eligibility, property type, etc. For instance, a new property in a prime location with modern amenities attracts higher principal.
With a sizable loan amount, individuals can address a host of big-ticket expenses like child’s education, wedding, travel, home renovation, debt consolidation, etc.
- Easy repayment option
By applying for property loan, individuals can choose a long tenor of up to 20 years. It allows them to plan their repayment efficiently after estimating the EMIs. However, individuals should opt for a shorter tenor to reduce the overall interest outgo.
For better computation, they can also access a loan against property EMI calculator and arrive at a monthly instalment best suited for them.
- Quick loan approval and disbursal
You can ensure quick loan approval and disbursal if you can meet most eligibility criteria and submit all the necessary documents in order. Moreover, selected financial institutions also offer doorstep services. It allows borrowers to complete the loan processing and paperwork from the comfort of their homes.
Selected HFCs also extends pre-approved offers to their existing customers that simplify and expedite loan processing. These offers are available on a range of financial products like loan against property, home loans, etc. Enter your name and contact number to check your pre-approved offer within seconds.
- Balance transfer facility
Current borrowers can also transfer the outstanding loan balance to a new lender and enjoy lower interest rates and better terms. It helps them to reduce the interest burden and EMI payable accordingly.
Alongside, borrowers with a spotless repayment history can also qualify for a sizeable top up loan on their existing one. However, it is essential for borrowers to decide the right time for such a transfer, preferably in the initial repayment phase.
Besides these features, intending borrowers should also know how to apply for loan against property online.
The application process of property mortgage loans
Following are the steps to apply for a loan against property online:
Step 1: Visit the online website of a lender you want to choose
Step 2: Go to ‘Loan against Property’ and select ‘Apply Now’
Step 3: Open the online loan against property application form and fill it duly with details like name, contact number, address, property details, income details, etc.
Step 4: Submit it online alongside necessary documents
On receiving the form, lenders verify with you and initiate loan processing. After documentation and property verification, they approve and disburse the amount. Note that any discrepancies in property details or papers can lead to loan against property application rejection.
Hence, once you are aware of all the details of a loan against property, you can leverage its unique features and utilise the funds cleverly. Moreover, with the proper knowledge, you can also repay the loan without much hassle.