Mortgage Loan
What is Loan Against Property?
Mortgage Loan commonly known as Loan Against Property in India is a secured loan that is sanctioned against fully constructed, freehold residential and commercial properties.At, 3M Loans, we believe in educating our customers so some of the key factors are given below for your consideration before you apply for Loan Against Property.
Purpose of Mortgage loan
Loan against Property is normally can be taken for funding various personal or business needs of an individual eg:-
Business Expansion , Education Expenses of Children , Marriage in Family , Purchase of Home or Office , Improvement or Extension of Existing Property , Any Other Personal Need etc.
Loan Amount
Typically you can get up to 55% 70% of the value of the property or twice your annual income (whichever is lower) as a Loan Against Property and nowadays lenders have many other different products like Banking Surrogates.
On the basis of your running loan tracks, the maximum loan amount is normally between Rs. 5 10 crores, but can be extended in some cases depending on the borrowers profile.
The final loan amount is dependent on host of other factors like income and regular outgoings, existing loans, repayment track record, valuation of the property by the lender etc. Loan Against Property is given on the below mentioned properties and the percentage that you can get loan is listed below.
Residential Property
Self-Occupied 75%
Vacant – 60%
Rented – 60%
Residential Property:
Self-Occupied 60%
Vacant – 55%
Rented – 55%
This varies from Bank to Bank in 5- 10% of the above. To calculate as to how much you can pay, it is looked at, by most banks in the below mentioned ways
For Salaried:
{(Net Take Home – Obligation) * 70%} / EMI per Lakh
For Self-Employed:
{(Income – Obligation) * 65%} / EMI per Lakh
Whichever is lower from the value of the property or your income- that loan amount will be given to you.
The other criteria are maximum age:
For Salaried 60 Years and For Self-Employed 70 Years
Rate of Interest
Loan Against Property is normally available on both – Floating and Fixed rate of interest. Many banks and NBFC offer a fixed rate of interest with a reset clause of 2-5 years which means that your fixed interest rate will be reviewed every 2-5 years and can be increased or decreased as per the terms and conditions mentioned in the agreement and floating rate based on the market conditions and effective repo Rate.
Repayment
Most lenders offer maximum tenure of 15 years, however, it is also dependent on the borrower’s age at the end of the tenure so as to ensure that the loan repayment ends on or before the retirement age of the borrower which is usually 60 years for salaried and 70 years for self-employed borrowers.
Fees and Charges
- The processing fee for Loan Against Property may vary from lender to lender but generally is from 0.45% to 1% (excluding service tax) of the loan amount.
- The loan can be foreclosed any time on the payment of the applicable penalty, however, if the loan is taken on floating rate from the bank, then the borrower need not have to pay any foreclosure charges.
Document Checklist
To start the loan process, the lender will require proof of –
- IDENTITY
- AGE
- RESIDENCE
- INCOME
- PROPERTY DOCUMENTS INCLUDING TITLE DEEDS ,CHAIN OF DOCUMENTS , etc.
Mortgage Loan Eligibility
The applicant for the loan should be:-
- Minimum 21 years of age
- Salaried Individual
- Self Employed professionals / non-professionals
- Applicant should be the owner of the property and all co-owner has to compulsorily be co-applicant in the loan, however the co-borrowers need not be the co-owner to the loan.