Loan Against Property

Loans for property

The easiest way to get your property loan.

Home Loans (Construction/Purchase): A home loan is a type of loan where the consumer borrows money from a lender which would typically be a Bank, an NBFC or a housing finance company, to purchase a residential property and offers the same property to the lender as a security.

Home Loans may be used to do any of the following:

1. Purchase a property within a residential development which is currently under-construction
2. Purchase a ready property, typically from a builder or its current owner
3. Purchase a plot –in a private development OR from a current owner Or from a government development authority
4. Finance the construction of your house on a plot you already own
5. Purchase a Plot as well as finance the construction of your home on it.

Most institutions lend upto 80% of the value of the property as a Home loan, provided the borrower can demonstrate the ability to pay the installment for such a loan.

Loans against property: LAP in the financial services circles, these loans are a convenient means to access funds at interest rates which are lower than personal loans or other forms of unsecured loans.

Loans against property may be availed on:

  • Residential properties
  • Commercial Properties
  • Industrial properties

These loans can also be availed against a plot and not just against a constructed property . At most times they are priced slightly higher than regular Home loans but are definitely cheaper than personal or other unsecured loans.

Most institutions lend upto 80% of the value of the property as a Home loan, provided the borrower can demonstrate the ability to pay the installment for such a loan.

Commercial property loans: Commercial Property loans are meant to purchase commercial properties much like Home loans are meant to purchase residential properties.

Commercial Property Loans may be availed for:

1. Purchasing a property within a commercial development which is currently under-construction

2. Purchasing a ready commercial property from its builder or its current owner

3. Purchasing a plot –in a private development OR from a current owner Or from a government development authority

4. Financing the construction of commercial use building on a plot you already own

5. Purchasing a Plot as well as financing the construction of your commercial property on it.

Most institutions lend upto 80% of the value of the property as a Commercial loan, provided the borrower can demonstrate the ability to pay the installment for such a loan.

Home LOANS for NRIs: NRIs who are salaried individuals, it is possible not only to purchase properties in India but also to avail loans for funding these purchases.

Currently, NRIs residing in the US, UK or the UAE can avail the following types of loans:

  • Purchasing a Residential property within a residential development which is currently under-construction
  • Purchasing a ready Residential property, typically from a builder or its current owner
  • Purchasing a Residential plot –in a private development OR from a current owner Or from a government development authority
  • Financing the construction of a Residential l property on a self-owned plot.
  • Purchasing a Plot as well as financing the construction of the Residential property on it.
  • Loan against Property for Residential or Commercial properties

Most institutions lend upto 80% of the value of the property as loans, provided the borrower can demonstrate the ability to pay the installment for such a loan.

The repayment for such loans can only be processed through NRE or NRO accounts.

Lease rental discounting: This is product tailored for people who have significant rental income.

Under Lease rental discounting, the borrower avails a loan by pledging the future rental income to the lender. In this way the borrower can get money upfront in lieu of the rental income which would come to him over a period of time.

This product is typically useful for people who have significant rental incomes but at the same time may not be able to leverage their property directly and avail a loan against it. This could be because the property may already have a loan against it.

One does need to remember that only 75-80% of the value of the rental income for the remaining lease period is what the user can expect to avail as a loan amount. The tenure or duration of such loans is much shorter than other property based loans and usually linked to the amount of time remaining for the lease on the property to expire.

Most institutions discount upto 90% of the value of the remaining lease, provided the borrower can demonstrate the ability to pay the installment for such a loan.

Personal Loans:

Personal loans are no-questions-asked unsecured loans given to individuals on the basis of their profile only i.e. income, nature of employment, years of work experience etc. Such loans, unlike property based loans or car loans do not require the borrower to give any kind of security or collateral to the bank. Most banks do not question the purpose for which the loan is required, but you would still be required to state the purpose on the application form. Almost universally, banks do not allow these loans to be taken for speculative purposes e.g.: investing in stocks etc. This product is mostly for salaried individuals only.

Personal loans are currently offered from Rupees 50,000 to Rupees 15 Lakhs and are typically repaid in tenures ranging from 1 to 5 years. They can usually be processed and disbursed within a week.

These loans, are definitely costlier given that the bank has no security to fall back on in the event a borrower is unable to pay their installments on time.. However it is the product- of-choice when funds are required urgently or the borrower has no other security to offer the bank.

Business Loans:

Business loan is fairly generic and there is a vast spectrum of the different types of finance options that a business can access. However, in the current context, under Business loans we are largely referring to unsecured income-based loans for self-employed individuals or companies.

Unsecured business loans have no requirement for a security or collateral to be submitted and are offered purely on the current financial strength and past credit record of the borrower.

They are not as flexible as overdrafts and other credit lines which usually support day-to-day working capital requirements but given the unsecured nature of the product, they are relatively easy to avail with simple paper work and speedy processing and the borrower does not need to lock in any asset or security as collateral. However, that also means that Business loans are usually costlier than other forms of secured business finance.

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