Loan Against Property

Personal Loans are usually of two types i.e. secured personal loan which is secured against the mortgage of immovable property, insurance policies, GOLD jewelry, investments, etc and another is unsecured personal loan which does not require you to pledge anything. Mortgage Loan commonly known as “Loan Against Property” in India is a secured loan that is sanctioned against fully constructed, freehold residential and commercial properties.

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Some Quick Facts

Purpose

Loan against Property is normally taken for
FUNDING various personal or business needs
of an individual e.g. · Business Expansion ·
Education Expenses of children · Marriage
expenses in the family · Purchase of home ·
Improvement or Extension of existing Property ·
Medical Treatment · or Any other personal
Need.

Loan Amount & Eligibility

Typically you can get up to 50% – 60% of the
value of the property or twice your annual
income (whichever is lower) as a loan against
property. The maximum loan amount is
normally between Rs. 5 – 10 crores, but can be
extended in some cases depending on the
borrowers profile The final loan amount is
dependent on host of other factors like income
and regular outgoings, existing loans,
repayment track record, valuation of the
property by the lender, etc.

Interest Rate

Loan against Property is normally available on
Floating as well as Fixed rate of interest. Most
of the lenders will offer fixed rate of interest with
a reset clause of 2-5
years which means that
your fixed interest rate will be reviewed every 2-5
years and can be increased or decreased as per
the terms and conditions mentioned in the
agreement.

Repayment

Most lenders offers maximum tenure of 15 years
but it is also restricted by the borrower’s
age at the end of the tenure so as to ensure that
the loan repayment ends on or before the
retirement age of the borrower which is usually
60 years for salaried and 65 years for self
employed borrowers.

Fees & Charges

The processing fee for loan against property
may vary from lender to lender but is usually up
to 2% (excluding service tax) of loan amount.
The loan can be foreclosed any time on the
payment of applicable penalty, however if the
loan is taken on floating rate from the BANK
then the borrower need not have to pay any
foreclosure charges as the RBI has issued
notification banning penalty of prepayment of all
floating rate loans.

Documentation

To start the loan process, the lender will require
proof of:- · Identity · Age · Residence · Income ·
Property Documents including Title Deeds,
chain of documents (if resale) and no-
encumbrance certificate

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