A loan against property is a secured loan where a residential/commercial property is vowed as collateral. It is a long haul advance. Loan against property is exceptionally prevalent among self-employed individuals. Loan against property is reasonable contrasted with individual credits as the interest charged is similarly low.
The rate of interest ranges from 9-14% a year. In spite of the fact that advance residency for loan against property ranges from 1-9 years, it can be stretched out up to 15 years. The lender checks your financial assessment before endorsing the loan. To profit an Loan against property, you ought to have an unmistakable and attractive title to the property.
Banks give loans ranging from 50-65% of property value. NBFCs (Non-managing an account Financial Companies) offer loans up to 75% of property estimation. A Loan against property has a processing fee ranging from 0.5-1.5% of the credit sum authorized.
Why apply for a Loan against Property?
LAP helps meet long-term and short-term financial requirements like children's education, business, medical emergencies, and so on.
Eligibility criteria to apply:
All co-owners of the property must be co-applicants.
Salaried persons should be between 22 and 65 years.
Self-employed persons should be between 25 and 65 years.
Properties not accepted as collateral:
A plot of land
Property of a co-operative society
Industrial sheds
Warehouse or cold storage
Agricultural building or land
Property under construction
Rules:
The property should be insured
The property should satisfy the minimum area criteria required by banks.
The property should satisfy the minimum market value, depending upon where it is located be it non-metro or metro-cities.
How much loan can be availed in LAP?
Lenders ascertain eligibility to avail a loan by taking into consideration a percentage of property's market value and the capacity to repay. Usually, non-banking financial companies (NBFCs) and banks offer a loan amount ranging from 50- 65% of the property value.
Tenor:
The tenor of a loan against Property ranges from 1 to 9 years. However, it can be extended up to a period of 15 years. Rate of interest for a loan against property: The rate of interest for a loan against property is lower than a personal loan. Loan against property has a rate of interest ranging from 9-14% a year.
Charges and penalties:
The fees, charges and penalties payable are as follows:
Processing fee: Ranges from 1-2% of the loan availed. This amount is deducted from the sanctioned loan amount.
Statutory charges
Stamp charges
Penalty in case of delayed payment of the EMIs (Equated Monthly Installments), a penalty interest of 2-3% a month of the overdue installment amount is payable
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