Interested in financial products

About Loan Against Property

Loans have become a part and parcel of one’s life. It is looked as a strong assistance to meet the long-term and short-term financial requirements in the course of one’s journey. With the change in lifestyle and increase in consumer demands, planning your finance well in advance is inevitable. While investments yield return, some milestones such as children’s education or marriage or a well-planned international holiday require additional financial assistance.

Loan against property is a popular financial product wherein one can use their property to secure a loan. This loan can be used for personal purposes or for meeting major expenditure. Banks and financial lenders offer this loan against property on a residential building or commercial establishment or land. The property will need to be mortgaged with the bank. The loan amount is based on the market value of the property.

Since it is a secured loan, most banks are inclined to offer this loan without much hassle and take less time for processing. This means easy money for the borrower to meet certain goals. With many players in the market offering the same product, it is possible to customize this loan according to one’s needs. This loan is made available to salaried professionals, self-employed, NRIs who own a property or in the name of their family member.

Faq Loan Against Property
Faq Loan Against Property

Purpose of Loan Against Property

Loan against Property helps in achieving your personal or business goals with ease. It is a secured type of loan and as long as the property is legally owned by you, the process of getting the loan is quite simple. Most of the leading banks offer this financial product and it is gaining more popularity than before. It can be used for any personal purposes such a marriage, education, medical expenses or any other major financial requirement.

Features of Loan Against Property

Loan against property is a simple loan product wherein it is secure with the property that has been mortgaged. Some of the main features of this type of loan are:

  • The loan amount varies from bank to bank. Normally up to 60% of the market value of the property is given as loan. The amount ranges from Rs. 10 lakhs upto Rs. 7.5 crores.
  • With longer tenures for repayment, the interest offered is competitive.
  • Easy repayments are made through EMIs.
  • Most banks need minimal documentation for this type of loan. Processing takes only 3-4 days.
  • Minimum age requirement is 21 years and can go up to 65 years.
  • This loan can be availed by salaried professionals, self-employed individual, IT assesses etc.

Eligibility Criteria for Loan Against Property

There is an eligibility criterion in place by most banks to avail loan against property:

  • Own residential or commercial properties in own name or family member.
  • Should be an individual who is an employee, professional, self-employed or income tax assessed or NRI.
  • Minimum annual net income of Rs. 3 lacs
  • Maximum age limit of 70 years.

Benefits of Loan Against Property

Loan against Property is a secured loan and therefore, chances of rejection from the bank is less. It is a popular type of loan and has been seeing increased demand. Some of the major benefits are:

  • Flexible tenure of upto 20 years is available with some lenders.
  • One can avail this loan on different types of properties like residential, commercial or land.
  • Interest rates start as low as 11%.
  • Minimum loan amounts start at Rs. 5 lacs and maximum can go upto Rs. 5 to 7.5 crores.
  • One can also transfer an existing loan to this type of loan and get refinance.
  • Since the loan is already secured by way of the property, there is no additional collateral required.
  • Some banks do no charge prepayment penalties on this type of loan.
  • Competitive interest rates are available on Loan against Property.
  • Hassle-free and quick to process loan.

Interest rates and other charges on Loan Against Property

Interest rate is calculated on the basis of the amount borrowed and the tenure for which it is being borrowed. Loan against property is already secure, hence, it is possible to negotiate a better rate of interest on the basis of many factors. If a longer tenure is taken, then the interest rate will further come down. Rate of interest with most banks hover around 9% to 12% on an average.

There are some nominal charges and fees applicable while taking this loan from banks. The below table gives a general understanding of it:

Loan Processing ChargesAround 1%
Prepayment ChargesLevied by some banks and not charged by others. If levied, it is charged around 2.5% of the principal outstanding
Late payment fee1% to 2% on the overdue EMI\
Bounce cheque chargesVaries from Rs. 250 to Rs. 550
TenureRanges from 10 to 20 years

How to Apply for a Loan Against Property

It is advisable to consult a bank representative before applying for a loan against property. This can be done at any of the bank branches closest to you. Most banks have a wide network of branches, thus making it convenient to approach for any banking service. A personal consultation will help in understanding the requirements of the loan and terms & conditions. With complete knowledge of the financial product, it will be easier to apply for the loan with the required documents and avoid a possibility of rejection.

Many banks offer an option of applying online. This is quite easy and hassle-free as everything can be done at the click of a button. Some banks also accept document submission online as well. The 24x7 Customer service can be availed to obtain information with just a phone call. If interested, some banks offer door step service by sending their representative to your home.

The general documentation required for availing this loan are and this remains more or less same with most lenders:

  • Application form duly filled in with a photo
  • ID proof
  • Age Proof
  • Residence proof
  • Copy of the title documents of the property being mortgaged
  • Last 6 months’ bank statement
  • Last 3 month’s salary slips
  • Income Tax Returns
  • For Self-employed individuals, office address proof, proof of existence, Last 3 years’ financials and any other existing loans must be produced.

Top Banks offering Loan Against Property

Some of the top lenders in the country who offer this type of loan are:

  • SBI
  • HDFC Bank
  • Axis Bank
  • ICICI Bank
  • Bajaj Finserv
  • RBL Bank
  • Deutsche Bank
  • Kotak Mahindra Bank
  • Reliance Money
  • IndusInd Bank

FAQs: Loan Against Property

1. What is the maximum amount of loan that I can get on loan against property?

Normally, banks offer maximum loan amount of 60% to 85% of the market value of the property.

2. Is it possible to foreclose loan against property account?

Yes, it is possible to foreclose loan against property account by submitting a written request to the bank.

3. What properties are considered under this type of loan?

Residential property or shops or commercial buildings are considered as collateral under this type of loan.

4. How can I apply for a loan against property?

There are many ways to apply for a loan against property. An online application form can be submitted on the bank’s website. Phone banking facility can be used for placing a request for this loan. One can visit the closest bank branch and meet a bank representative to discuss details. Existing customers of the bank can contact their Relationship Managers and apply for loan against property.

×Thank you! Your comment will be reviewed and posted shortly.

Write a review

CreditMantri will never ask you to make a payment anywhere outside the secure CreditMantri website. DO NOT make payment to any other bank account or wallet or divulge your bank/card details to fraudsters and imposters claiming to be operating on our behalf.