Opting for hefty loan amounts like Rs. 50 Lakh can be beneficial for numerous purposes. Right from financing your child’s education to marriage expenses, buying a residential property to commercial office space, buying a vehicle to establish a business, you can use this amount for any purposes.
A loan against property can help you avail Rs. 50 Lakh. It comes with no end-usage restriction and allows you to use the loan amount for any purpose. You can consider a loan against property as the most suitable financial product to avail the said amount subject to whether you have such a property to mortgage.
Here are some important questions which you should ask and know the answers to before applying for a loan against property to avail Rs. 50 Lakh.
What is a loan against property?
It is a method of availing loans by mortgaging property. Value of the mortgaged asset is evaluated, and property loan is approved accordingly. Some financial institutions can approve up to 75% value of property to mortgage.
Which properties can be pledged for a mortgage?
The properties eligible for a mortgage can be a house or piece of land having substantial market value. The loan applicant must be the sole owner or co-owner of the property. One can even mortgage a self-occupied or rented residential property.
What are the eligibility criteria?
Eligibility conditions are somewhat flexible since the loan is secured in nature. To qualify for a loan against property, these are the eligibility conditions.
- Should be a salaried employee of age between 33- 58 years.
- Should be a self-employed individual between 25 to 70 years having a regular source of income.
- Must own a valued land/ property ready to pledge as collateral.
Which documents to arrange?
Documents to produce while opting for a property loan are mentioned as follows.
For salaried employees –
- Proof of identity.
- Proof of address.
- Latest salary slip.
- Bank statement of last 3 months.
- Document’s copy for the property to be mortgaged.
For self-employed professionals & businessman –
- Identity proof.
- Address proof like utility bills, Aadhaar card etc.
- Bank account statement for the past 6 months.
- Documents of property up for the mortgage.
What is the expected rate of interest and tenor?
You can avail a loan against property with a long tenor of 18-20 years. Therefore, loan repayment can become even more difficult if you opt for a short tenor because your EMIs will be bigger. You need to take your monthly financial obligation and need for finances into consideration before applying for a loan. Know how to determine the tenor for your loan against property and plan your finances accordingly.
What are the benefits?
- One can expect negligible or no pre-payment charges if the loan is availed on a floating rate of interest. Note that the floating rate of interest is calculated based on various financial factors for every 6 months.
- Quick loan approval process helps make your application procedure hassle-free.
- Large loan amounts like 50 lakh can help you in finance of multiple requirements.
- Loan repayment is easier with shorter EMIs calculated because of a large tenor.
How is the loan amount determined?
One can opt for a loan as high as Rs. 3.5 Crore with a loan against property as offered by leading lenders. But they should check if they are eligible for the amount to ensure the application is approved. The credit value for loans against property depends upon the market value of property. Financial institutions will estimate your property value and will approve only up to 75% of it. Note that lenders may even offer only 60% if the applicant is not suitably creditworthy as per their eligibility criteria.
Does credit score affect my loan application?
Since loan against property is a secured loan, lenders are at a lower risk to disburse the loan. Hence, applicants may not necessarily require a strict 750 and above CIBIL score. Financial institutions allow some flexibility in this case. However, the application is subjected to rejection if applicants have a CIBIL score below the least required range.
Is there any restriction on usage of the loan amount?
There is no end usage restriction on the availed loan amount. One is free to use it for establishment/ expansion of business, purchase of a home, vehicle, finance of abroad study expenses, marriage expenses etc.
One can avail a loan against property to finance all such expenses. To make the process hassle-free and convenient for users, NBFCs like Bajaj Finserv pre-approved offers on such loans. These offers are also available on a variety of other financial products including personal loans, business loans, home loans, etc. Check your pre-approved offer just by submitting basic details such as name and contact number.
Acquiring a high amount of loan can solve your financial problems for the moment but may increase trouble in future if you apply for it in haste. Know which interest rate is better between fixed and floating rates for your loan against property before applying to a lender.