Loan against property is a type of a loan which can be availed by keeping a property as security. Banks and private financial services providers of India are offering loan against property to resolve various kinds of financial crisis. The loan against property, can be either be a residential/commercial building or a piece of land. You have queries regarding loan against property? The top 10 FAQs on loan against property will help you in getting the right fit for your financial crisis.
Need Money?? Have a Property?? Take Loan Against Property
The loan can be availed by mortgaging the property with the bank/private lenders. The loan amount depends on the type of property and in most cases the market value of the property is considered before disbursing the loan, generally commanding about 40% to 60% of the actual market value. However; majority of the people when availing loan against property India are not aware of the procedure and do not have the clarity of the loan commitment. With our top 10 FAQs on loan against property; your majority of the queries has been resolved and you have a better idea of what you are getting into.
Top 10 FAQs On Loan Against Property
Q. 1 How Loan Against Property Is Different From A Home Loan?
Both of these loans are 2 poles apart. When you are buying a new home; it is when home loans are availed. For loan against property you need to put your valuable asset/property/land as a collateral to fix your financial problems. Getting loan against property might be serving various funding purposes like an upcoming wedding, getting funds for your kids for higher education abroad, using it for business expansion, and so on.
Q.2 Is It Okay To Take Personal Loan or a Loan against Property?
It is one of the most commonly asked in FAQs on loan against property. A personal Loan acts like a multi-purpose loan.Personal loan providers of India do not ask for any security or collaterals. If you have a property, you should leverage it for funds. A loan against property scores over a personal loan for the following reasons:
A Personal Loan is available at steeper interest rates approx 20% when compared to loan against property which is approx 15%.
A personal loan is available for shorter periods which could be ranging from 1-5 years whereas loan against property is usually available for long tenures of up to 15 years.
The processing fee is lower for a loan against property which is approx 1% as when you compare with personal loan which is approx 2.5% depending on the bank/private lender you choose.
Q.3 How Much Loan Amount Can I Get Under Loan Against Property?
To get loan against property, you can expect approximately 60-80% of the market value of the property provided as collateral depending upon the bank or the private lender you choose to. The loan amount you can expect depends on the several factors lie Factors like your income, savings, investments, job stability, age, dependents, spouse’s financial health, other loans in your name also play a crucial role in determining the loan amount.
Q.4 Does a bank check my Credit Score before giving me a Loan against Property?
Absolutely Yes. Even though a collateral is provided, banks or the private lenders do check the Credit Score of the applicant as well as the repayment history in case of availing loan against property. If your CIBIL score is over 750; it is considered enough for the loan approval. In case of a loan against any other asset like shares, valuable assets or gold, the bank would sell the pledged asset to recover its dues. That’s a lower risk to take as compared to losing a home. A loan against property can prove to be a good option for you if you are confident of repaying your dues on time.
Q.5 What If The Property Is Owned By More Than One Person? Is It Possible To Apply For Loan Against Property?
All the co-owners of the property will automatically become joint applicants of the Loan against Property. You can apply jointly with a co-applicant, but the co-applicant must belong to your family.