A Business loan or personal loan can be secured against property. This is one of the oldest and easiest ways of obtaining financial aid from Banks and Financial Institutions. In older days, regional lenders used to provide loans to the borrowers, the interest rate used to be extremely high with a long tenure.
Nowadays, apart from Banks, there are various financial institutions that provide financial help for business as well as personal use. Loan against property is a secured loan that is taken by using the property as a mortgage. This helps you make use of idle property and provides financial aid. Business owners are eligible for a loan against property, the only criteria being a business which has complete documentation. In addition, the age of the applicant should be minimum 25 years and the property should have a valuation of atleast Rs.50 lac.
Loan against property is a secured loan and has a simple process. The process is transparent and there is a simple documentation requirement which includes identity proof, address proof, income proof and documents of the property. It is a quick route to financing and highly preferred among most individuals. The interest rates are as low as 12% and the tenure can be adjusted according to the EMIs. The tenure can be as long as 15 years in certain cases. Thus, loan against property ensures that the ownership of the property remains with you and a mortgage on it can be used to get financial help for your business.
The applicant can use residential as well as commercial property for the loan. You can also use rented out property to pledge or use your own property. In addition, land, farm house, nursing home and hotels can also be used to pledge against the loan. The application process is quite simple. Compare the interest rates offered by different Banks and Financial Institutions before you make a decision. Then decide whom to approach for the loan, once you have made a decision, fill in the application form and submit the necessary documents and photographs to the lender. Any Bank or Financial Institution will verify the documents of the property. After verification, the lender will seek for valuation of the property and on the value determined after the verification, a loan amount will be settled. The loan amount is based on the value of the property. A certain percentage of the value is sanctioned as the loan amount to the borrower. Hence, higher the value of the property, higher the loan amount. The valuer will determine the market value of the property and on the basis of the same, the Bank or Financial Institution will sanction a loan amount.
The only drawback of the loan against property is the loss of property in case of default in the payment of EMIs. In this case, the Bank or Financial Institution can take legal action against the borrower and auction the property. The borrower is required to abide by the terms and ensure timely payment of EMI for a long term financial loan.
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