Loan Against Property

All Purpose Loan | Loan Against Property

Loan against property is an all purpose loan. A loan can be taken for any reason in the time of financial emergency. There is personal loan but it is tagged with a high interest rate along with short loan refund occupancy. Thus many people are not able to take personal loan. If you own a house you can take loan beside and it turns out to be cheaper than a personal loan. The reason after this is the lender has the mortgaged property as security with it then there is no tension of debtor of loan amount. While in the personal loan there are no such security norms.

The loan given against property has a long refund period, normally 10 years. The loan can be taken for any financial necessity whether it is for funding of the existing business in case of debt consolidation, any emergency, education, marriage or other controls.
In case of personal loan you have to identify the reason for taking loan but in this loan there is no such law but if your loan amount is Rs 25.00 lacs and above then you have to specify the purpose of the loan.

For example the country's largest public sector bank SBI has a section that the loan can be taken for some purpose what so ever.
In case the amount of loan is Rs 25.00 lacs and above then purpose of loan will have to be specified along with an responsibility that loan will not be used for any temporary reason whatever including assumption on real estate and equity shares.

Some of the banks give the loan against both types of properties whether residential or commercial but some of them give loan against only the housing property. The loan amount can array from Rs 10 lakhs to Rs 3 crores, though the amount varies from lender to lender.

Some of the banks offer special schemes along with this loan like free personal accident insurance cover.
To get this loan you must be above 21 years of age and the maximum is 60 years, whether salaried of self-employed.
For instance the largest public sector bank the State Bank of India has the following eligibility criterion - an individual who is: an employee or a professional, self-employed or an income tax assess or engaged in agricultural and allied activities. Bank has fixed the highest age limit to 60 years.

Though, some banks have fixed the maximum age limit for self-employed individuals to 65 years. The salaried applicants should be employed continuously for at least three years.

Documentation
Necessary Documents for applying for loan are:

• Proof of identity (Adhaar Card, Passport, Driving License etc).
• Proof of Residence Address (Passport Copy, Electricity Bill etc), and Proof of Age (Birth Certificate, School Leaving Certificate, Passport etc).
• Salaried individuals must submit their latest acknowledged IT returns or Bank Statements for the last Three Months.
• Self-employed individuals can submit addition of income for the last two years certified by a c.a.

In this loan there is a capability of an overdraft. Some banks offer this facility. The big benefit of taking this loan using the overdraft option is that the borrower has to pay the interest only on the money withdrawn, till the time loan is repaid.
While in the normal course the interest is paid on the entire amount throughout the tenure of the loan.

Before finalize a bank check for the fees and penalty. Banks charge processing fees - is the amount charged by banks to cover the cost of processing your loan.

The amount range diverges from bank to bank. The fee amount is generally between 0.25 to 2%. The foreclosing of the loan before the real Term carries prepayment penalty.

Some banks charge this as a percentage of the outstanding principal of the loan amount. Therefore study all the features and terms and condition carefully.

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