While dealing with a precarious financial crisis, your property can be the key to the needed funds. People often end up selling their property when facing such economic meltdowns. Unfortunately, selling your property is not a viable option as you will end up losing your hard-earned asset over a financial need. During such uncertain times, mortgaging the property can be an excellent option to avail funds at lower interest rates. As your property is one of your biggest assets, losing it can be heartbreaking. However, an option like property mortgage loan can fulfil your needs, while retaining your ownership on it.
Here is an overview of Loan Against Property to help you understand its features and benefits.
The purpose of the Loan Against Property
A loan against land can be used to boost your business in various ways like taking on newer projects, building a new team, expanding production and-the-like. It can also be used for several purposes such as funding the education expenses of children, marriage expenses, renovation of home, medical emergency or any other personal needs. A Loan Against Property lets you utilize the land or home you own to its full potential. You can also continue using your property for any business or personal requirement, even though it is mortgaged with the lender.
Benefits of Loan Against Property
As your property is kept as collateral with the lender, the risks involved in taking a mortgage loan against property is lower. Furthermore, as the loan requires collateral, the rate of interest is generally lower compared to other types of loan. If you own a piece of land or home, you can easily avail a loan against property without any difficulties. These loans offer longer tenures, typically going up to 15 years. This again is an added advantage as you can plan your EMI’s accordingly. Besides, there is no restriction on the usage of these funds. You can use these funds for any purposes. Though the borrowers cannot avail tax benefit on the principal repayment of the loan, they can get a tax deduction on the interest paid and other documentation charges.
Eligibility, Fees and Charges
If you are applying for a property mortgage loan, you will have to meet an eligibility-criteria authorized by the bank. Most banks and financial institutions require the applicants to be of minimum 21 years of age and not older than 65 years at the time of loan maturity. Furthermore, if you are a salaried individual, you must have the minimum income as prescribed by the lender. If you are a self-employed individual, the business should be operational for a minimum duration of 3 years, with a profitable history of two years. Most of the banks charge a processing fee and other charges on the Loan against Land. The processing charges are usually up to 3% of the loan amount. However, this may vary depending on the lender. For a smoother process, the lender may also require proof of Identity, Address, Income and other property-related documents while approving the loan.