A businessman obtains a loan against property by pledging his house

Loan Against Property: Everything You Need to Know

Q: Are there processing fees for a loan against property?

Banks charge property evaluation fees and legal verification charges.

Q: Can I apply for loan against property if I am a joint owner?

Yes, you can if the joint owner is also a co-applicant.

Q: How can I choose wisely in a loan against property scenario?

Compare the interest rates, repayment tenure, and processing fees of different banks. Choose the one that works for you, considering your financial commitments.

Q: How quick is the approval for a loan against property?

You can visit the bank’s website to check your application status. The bank will also send a message to your registered mobile number or a mail to your registered email ID once your application is approved. It usually takes about 72 hours for the loan disbursement after approval.

Q: Can a Non-Resident Indian (NRI) apply for a loan against property?

Yes, an NRI can apply for this loan. However, the documents required will differ. And these documents will vary from bank to bank.

Team PaisaSimple • June 19, 2024

What if there’s a way to make big-ticket expenditures at a lower interest rate and flexible repayment tenure? Sounds a tad bit too good to be true? Well, let’s learn about a loan against property.

A loan against property is provided by banks against mortgaging your property. The loan is of a secured type because your property is the collateral.

Lending against property can be against your home, commercial site, empty land, or farmland. The loan amount disbursed is up to 75% of the market value of your property.

We present this exciting topic on leveraging your property to meet big-ticket expenses. So, let’s deep dive and see the eligibility, documentation, and application procedure for loans against property.

Who is Eligible?

To apply and avail of this loan, the following are the requirements:

- You must be between the ages of 18 and 70 years and a resident of India

- You must be salaried or self-employed

- Your property must be in India with all legal property documents

- You must have a credit score above 750

The Features of Loan Against Property

Suppose you are disciplined to avoid missing your EMI payments and have a practical repayment plan in place. In that case, this loan is one of the best options out there, and for the following features:

1. Obtain a large loan value

Since you pledge your property, you receive up to 75% of the property value as the loan amount. Therefore, the higher your property’s value, the larger the sanctioned loan amount will be.

2. Lower interest rate

Lending against property puts the lender at low risk because your property is the security. And any risk can be reduced by making a legal claim on the property. This protects the lender and, therefore, attracts a lower interest rate. This works in your favour because a lower interest rate means a comfortable monthly instalment amount.

3. Long loan tenure

One of the attractive benefits of a loan against property is the availability of a longer repayment period. This loan gives you the flexibility to choose your monthly instalments. What’s more, repayments can be made over a period of up to 18 years.

What Are the Documents Required?

Identity proof (PAN card, Driving License, Voter ID)
Address proof (Aadhaar card, Utility Bills, Passport)
Legal property documents
Income proof (income tax return filing, salary slips, audited financial statements)

How to Apply for Loans Against Property?

Find a lender that meets your requirements. Consider the interest rate, the loan repayment period, and processing fees
Calculate the monthly instalment amount with a comfortable loan tenure.
Begin the online application process
Prepare the necessary documents for submission and submit them at the bank along with the application form
The bank will verify the documents
The bank will depute a representative to inspect the property pledged
Once the application is approved, the loan amount is deposited in your bank account

Conclusion

Most people choose lending against property for the lower interest rate and the longer repayment period. Considering these, a loan against property can be your best bet for financing life’s bigger expenses.

The only major drawback is losing possession of your pledged property in case you fail to repay the loan. However, like all other financial tools, this loan can be favourable if you plan your finances well.