A very common type of loan is the loan against property which best described as a loan which is disbursed by the lender after mortgaging any of property of the borrower. Here the borrower gives a guarantee to the lender and this type of loan comes under the secured loan. The loan amount is decided by evaluating the value of the mortgaged property and its current value in which 40-60% of the total value is disbursed as the amount of loan.All of us need cash in one or another form, any certain or uncertain situation of time and any kind of movable and immovable property can be used to turn into cash. The loan against property provides the opportunity to the borrower to lend any of their property or asset as collateral and raise the fund for their requirement. The Loan against property usually holds a very low rate of interest due to the fact that property is already mortgaged to the lender as a guarantee but with a long tenure to repay.
The advantage of loan against property is you can apply for the loan without any specific reason; you can apply for the loan to meet your general requirement. The Loan can be taken for any of the purposes described below:
Business Expansion: It can be avail if your motive is to expand your business.
Marriage Purpose: If you need money for the marriage of your son or daughter you can avail this loan.
Fund for abroad studies: The monetary resource can be avail for children’s abroad study by taking LAP loan.
Fund for vacation: You can also apply for the loan if you desire a dream vacation and need monetary resources for the same.
For medical uncertainty: Life is uncertain and unpredictable and if we need financial help for any medical purpose we can apply for the loan against property.
In the market, there are five types of loan against property available which can be availed by the borrower. As per the need, one can avail the type which they want to apply for and they are:
Loan against rented residential property
Loan against self-occupied commercial property
Loan against vacant residential property
Loan against rented commercial property
Loan against industrial property
Now let us discussed every type of loan against property in brief:
Loan against rented residential property
The borrower can also apply for the loan against self-occupied commercial property and can avail around 60% of the total value as per market current price.
If you have any property which is not being used and is vacant without any purpose you can apply for the loan against the vacant property too. The lenders can provide 50% of total value as per market value.
Those who have commercial property but it is rented can also use the property to apply for LAP loan and these types of loan come under loan against rented commercial property. The borrower can get the disbursed loan of 60% of total value as per the current market.
The businessman who desires to expand their business can get the loan after mortgaging their industrial property and can avail a good amount of % of total value as per the current market scenario.
Age FactorAge plays a crucial role here. If you are salaried employee your age should not be more than 60 years and if the applicant is self-employed the age should not cross more than 65 here. The minimum age is 21 years.IncomeIncome of the applicant is evaluated by the lenders before providing the loan. They need to calculate what is the income of the applicant, risk in the market where he/she works, from how many years applicant is working, expense record of applicant etc.Cost evaluation of mortgaged propertyThe expert from the bank will evaluate the mortgaged property, the place value where it is located, and the documents of the property before committing to the applicant.BankingactivitiesBanking activities are considered as a prime factor while deciding the eligibility. Applicant’s past track record of account, account’s average limit, credit score etc factors are considered before taking any further step.ResidenceProofThe applicant should be Indian resident and must provide with valid address proof like the Adhaar card, PAN Card, Passport etc in order to avail the loan.
The documents required by different banks are different but we would like to share some common requirements which are asked by every bank.