Here’s a brief overview of loans against property

Here’s a brief overview of loans against property

Loan disbursed against the mortgage of the property is known as loan against
property or mortgage loan.If any borrower owns any kind of property- fully
constructed, residential or commercial property, then it is a wise decision to unlock
the property potential and use it to provide a shelter to the dreams and aspirations.
If one goes by the traditional way of mortgaging, they will end up to a bitter
experience. Shrugging the traditional way today’s world is looking forward to
embrace the HDFC loan against property for financing their personal desires of
holiday plans, marriage of their children, education cost, etc. provided by the banks
and other financial organizations.

The features of loan against property are: firstly, higher loan amount is available
for longer tenures at attractive rates; secondly, quick and hassle-free loan with
speedy approvals; thirdly, residential and commercial properties accepted as
collateral. The benefits are like higher loan amount with lower emi and flexible
repayment options between drop line overdraft facility or emi based loan
repayment.

The borrower who wishes to avail the mortgage loan, needs to fulfill certain
criteria of having good CIBIL score, younger the borrower, easier to get the loan
sanctioned, job stability to secure the EMI repayment. Some generic documents are
required to be submitted like; proof of residence, proof of identity, latest bank
statement, salary slips of last six months, form16 and copies of all property
documents that one chooses to pledge for the loan.The self-employed
individual/professional needs to submit the certified financial statement of last
three years, latest bank statement, proof of business existence, profit and loss
statement of last three years along with property papers and other basic documents.

If the borrower cannot fulfill the repayment capacity for getting the mortgage loan
sanctioned, then they can add a co-applicant. The loan providing organization will
check on the co-applicant to confirm, that, both the borrower and co-borrower can
repay the mortgage loan amount or not.

Banks and the financial company provides the loan at different rate of interest
depending on the pledged property type like; loan against property/loan for
commercial property varies from 10.10%-10.60%; loan against rent receivables

attracts 9.85-10.35%, for dropline over draft against property the rate is 10.60-
11.10%.

The mortgaged property acts as a security deposit for the money that the banks or
financial companies provide as loan. The original papers of the property remain
under the lending organization’s custody.

The loan tenure can be of fifteen years. This type of loan takes longer to get
sanctioned as the organization needs time to scrutinize the applicant’s details and
the property details. It covers commercial, residential and industrial properties.
Property on lease or bounded by power of attorney is not accepted as collateral for
the mortgage loan.

Before applying for the loan one must ensure that the loan procedure should suit
the purpose and the purse. So choose the lending organization diligently. The
borrower must pay special attention to the tenure of loan, longer tenure results
higher outflow of interest.

The value of the HDFC loan against property amount depends on the market value
of the mortgaged property; the banks and financial organization provide 40-60% of
the property value. If one fails to clear their debts, the lending organization has full
authority to seize the property and sell it to get the lending amount. So it is
advisable to the borrowers to avoid such kind of situation one must pay the EMI in
time.