Out of the variety of loan options available across the Country, a secured loan option is highly preferred by individuals as well as business owners. In order to raise quick funds for personal purpose or business purpose, loan against property is an ideal option.
If you own a property and are willing to mortgage the same for a loan, the entire process for you is transparent and hassle free. Various Banks and Financial Institutions offer a loan against property at a low interest rate and a flexible repayment schedule. The loan against property interest rates are competitive and vary from one institution to another. The low rate of interest has made it a viable option for borrowing.
The process of application and approval of the loan is transparent and simple. Firstly, it is important to study the lenders in the market when making a decision to borrow money against property. Compare the rates offered and then decide on the lender you want to approach. Next, fill the application form and contact the lender with the necessary documents. After this, the lender will evaluate your application as well as your business and then seek valuation of the property. The property will be valued by a valuer who will fix a value on the property. The Bank or Financial Institution will then grant a loan at a particular percentage of the property valued.
When the property is mortgaged for a loan, the possession remains with the owner, although the lender can possess the property in case of default in repayment of the loan. The lender has the power to take legal actions in case of default. The lender will provide a notice to the borrower in case of defaults, and after that, the property could be auctioned by the lender. Hence, it is important to ensure the timely repayment of the installment in a secured loan. Banks and Financial Institutions usually approve about 60% of the value of the property as the loan amount. Loan against property could include your residential home or your land, Financial Institutions provide loans to manufacturers, traders and service providers who are above the age of 25.
The property to be pledged must be less than 50 years old and it should hold a market value of more than 50 lacs. The maximum amount of loan is limited to 85% of the market value of your property. The eligibility for the loan is determined on the income of the applicant, valuation of the property and continuity of employment or business. Having a good credit record in the past helps you with the loan process and also makes you eligible for special schemes.
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