Loan Against Property: What are the Documents Need?

Whether it is the marriage of your daughter / son weighing on your mind or /  your son/ daughter going abroad for higher studies, financing these expenses can sometimes become a worry.

The best solution is to take a loan against property.

It is a loan given after the property is kept as collateral with a bank or / housing finance company (HFC).

Both residential and commercial properties can be mortgaged after the bank / HFC assesses the current market value.

The loan amount is about 50 to 70 percent of the total value of the property depend upon bank / HFC.

Therefore, if your property is worth Rs.50 Lac, you will get a maximum of  Rs. 35 lac as a loan against it. This is a secure loan because you are putting your asset as a security, which means that in case you default on the payment of the loan, the bank or HFC has the right to sell the said property & collect the balace amount.

Most secure loans have a lower rate of interest when compared to other loans like personal loans etc...!

Reasons for loan...!

* If you are facing a cash crunch, you could tap into the equity you hold in the home and liquidate it for tiding over your financial need.

* Whether you need the money to expand  business

* To fund your children's higher education

* The marriage of your daughter / son

* Medical expenses for your family

* For vacation expense

Simply said,  loan against your property can ensure that all your requirements are met.

Personal loan vs Loan Against Property..!

Several  people are confused whether it is better to take a loan against  property (and risk their house) or  / to take a personal loan.

Here are some facts on both loans to help you make the right choice:

Eligibility for Loan Against Property..!

Usually, a residential property that is rented out or / self-occupied is considered eligible.

Many people prefer to put up their land / property as collateral. However, you have to ensure that the home, land or apartment / flat that you intend putting up as a security has clear title deed & should be in the name of the individual that requires the loan.

Although every bank / HFC has a different criteria, the rates of interest levied on the loan against a property range from 13 to 15% with a tenure of 5 years to 15 years.

However, since most of these secure loans have a fluctuating rate of interest, you tend to pay more or / less every year.

There are a few aspects that all banks /HFCs need to verify before you get your loan approved:

^^  Debt obligations, income and savings..

^^  Market value of the property (Land and Building)  

^^ Borrowers repayment history on other loans

^^ Borrowers loan repayment capacity

Need of Essential Documentation..!

 If you are self-employed or /  a businessman, you will need to submit:

**       Proof of Residence Address

**       Proof of ID

**       Recent passport photographs - 3

**       Proof of Business

**       Income tax returns for the past three years

**       Education qualification certificates (If need)

**       Balance sheet for past three years of your business

**       Bank statements for past 3 or 6 months

**       Filled Application form

If you are employed and drawing a fixed salary, you will need to submit:

**       Proof of Residence Address

**       Proof of ID

**       Recent photographs - 3

**       Latest salary statement in Ofiice Letter Pad

 **      Salary slip for the past three months

**       6 months' bank statements

**      Form-16 / or Income Tax Return Proof

**      Filled Application form

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