by Shreekant Rao
Published Sun, Feb 19th 2017, 16:43 | Finance
Imagine you run into a financial emergency situation, trying to call friends & relatives but all you end up is number busy or no one is picking up your calls. Most of the times it is difficult to get a monetary source of help during your financial urgency. It is wise saying that money always creates a rift in your relationship and will set it apart. So, approaching lender would be the best solution to handle a crisis situation. But again the question arises, which financial product is most suitable for you in times of such crisis.
Traditional finances are a way to costly in terms of interest rates, tenure and no flexible ways to repay. The personal loan also come at higher interest rates. Relax! The best way to arrange finances for your financial emergency would be mortgage your property and availing a suitable loan against Property. In India, there are leading banks and finance companies who come with LAP solutions at affordable interest rates and flexible repayment options.
As the name suggest, Loan against Property means mortgaging your house, apartment, land to avail necessary finances. In today’s time, an emergency might erupt for various reasons such as business needs, marriage, medical expenses or other personal needs. Whatever the situation is with LAP, you get flexible repayment options and an interest rate that will prove easier on your pockets.
LAPs are provided at a certain percentage of your property’s market value. It usually stands around 50-60% of your property value in the market. Such loans help you leverage the economic worth of your home along with continuing to enjoy the occupancy of the same, so that you get immediate finance to meet a variety of business or personal needs. Multiple tax and insurance benefits are also associated with Loan against property.
Before sanctioning the loan amount, the lender will first access the net market worth of property. The company or bank will check your credit history, income source, your age, property age, market value and then determine a suitable LAP eligibility. The eligibility condition differs from lender to lender. The assessment is based on some common factors.
Age limit for getting qualified for LAP is between 18 to 60 years. A salaried individual will have to furnish a form 16, an identity proof, income proof such as bank statement reflecting income for past 6 months. In case of self-employed individuals you have to submit identity card, proof of income, IT returns along with computation for last 2 financial years, the complete chain of property documents, partnership deed (if applicable).
For identity, proof documents like Pan card, Voter ID card, passport, electricity bills are accepted. The sanctioned loan against property amount could range anything between minimum Rs 2 lakhs to a maximum of rs 10 crores.
You can avail LAP at an adjustable interest rate or fixed interest rate. Under fixed interest rate, the ROI remains constant throughout the loan term, while under floating interest rate it keeps varying based on inflation costs, government policies, market conditions, and other economic parameters. Each bank has its own methodology to fix these base rates.
A person can individually or jointly apply for loan against property. All owners of the property will have to be co-applicants. However, all co-applicants need not be co-owners. You can spread out your payments towards the loan over a maximum term of 15 years. The tenure of the loan also depends on the customer’s profile related to income source, risk appetite and background checks, an age of the customer at the loan maturity, age of the property at maturity of the loan, depending on the specific repayment scheme you opt for. You can make your monthly installment payments through Post Date Cheques (PDC) or Electronic Clearing Service (ECS).