Rakesh who is a salaried person has an urgent requirement of funds to pay for the hospitalisation expenses of his mother. Medical emergencies are unpredictable and can easily empty your savings. During these hard times, obtaining a loan against property can be the ideal option for you. This loan can be taken not just for medical expenses but for meeting any of your financial needs. The lender can easily provide you funds as in return you are providing him collateral in the form of property or any other fixed asset.
Why loan against property?It is a type of unsecured loan whereby the lender agrees to provide you the loan amount on submission of collateral in the form of property. The most obvious reason for a loan against property is that you can borrow a large sum of money by pledging your property as collateral. The amount of borrowing should not be more than the value of the asset that you provide as collateral. This loan is useful to those who need a large sum for emergencies or other financial needs. Which is unlikely to be provided under personal loans. Most financial institutions only provide personal loans up to 5 lacs without collateral. If you need a higher amount of loan. Then obtaining a loan against property is the best option you can exercise.
Essential features of loan against property
- Fast approvals- The borrower has to provide his property as collateral to the lender. It provides him assurance of recovery of his funds. The loans are thus approved in a fast manner. In case of bad debt, the lender can recover the due amount by auctioning the borrower’s property.
- Flexibility in repayments- The borrower can decide in what manner he will repay the borrowed amount. It is also up to the borrower that he chooses a fixed or floating interest rate. The loan tenure can be decided when a loan against collateral is taken by the borrower as per his own comfort. Generally, a repayment period of up to 20 years is allowed. You can use an EMI calculator to work out the amount of EMI payable on the loan.
- Collateral can be residential as well as commercial property- For the property to be given as collateral to the lender, it must be in your own name. You must have the title in the asset, be it a commercial or business property. Even a piece of land in your name can be put with the lender in the form of collateral.
- Minimal documentation requirements- The loan against collateral can be sanctioned to you with minimal documentation work. You only need to fill out the application form and provide KYC documents, property documents, and income proof to get the loan approved by most lenders. Easy availability of this loan makes it an attractive choice to the borrowers.
Know your eligibility and required documentationYou can determine your eligibility for a loan against property by checking whether you fall into the criteria provided by your lender. Most lenders adhere to the criteria mentioned below-
- The applicant’s age is to be between 22 years to 55 years
- Person should be in the business for the last 3 years
- A salaried employee should be actively employed and have income slips for the past few months
- The amount you seek for the loan should not exceed the value of the property you are providing as collateral.
The list of documents that will be needed for a loan against property will include-
- KYC documents containing your personal information
- Documents for address proof
- Your PAN card number
- Application forms duly filled and with photos attested
- Property documents
- Registration certificate for your business
- Past 6 months’ salary slips/ bank statements