Loan Against Property

A loan against property is a secured loan that is sanctioned keeping an asset as mortgage with the lender. This asset can either be an owned land, a house, or any other commercial premises. The asset remains as collateral with the lender until the entire loan against property amount is repaid.

This type of secured loan can be an alternative for unsecured personal loans as it also has no end-use restriction. However, the loan amount can be much higher and the tenure is also longer in this case. Loan against property interest rates are considerably lower as compared to any unsecured loan.

You can use these loans for business purposes like purchasing machinery, buying raw materials, purchasing equipment, funding of working capital, debt consolidation, etc. This type of loan can also cater to personal requirements like wedding, higher education, home renovation, buying a new home, managing medical expenses, etc.

Benefits of Loan Against Property

The various benefits of a Loan Against Property are:

Competitive interest rates

The interest rates are lower as compare to personal loans because it has security underlying. This results in lower EMIs, making it easy to for the borrower to address other financial needs without straining his/her budget.

Long repayment tenure

A Loan Against Property generally has long repayment tenure. This brings down the EMI, thereby facilitating repayment and easing the burden on the borrower.

Continuous ownership of the property

A Loan Against Property helps the borrower unlock the dormant potential of the asset. The borrower continues to own and use the property, while availing funds for the same. However, it’s essential to not default on EMI which might lead to legal hassles in the future.

Eligibility for Loan Against Property

There is a slight difference in Loan Against Property eligibility for individuals and businesses. Generally, for salaried individuals, lenders fix a certain annual income below which they don’t approve the application.

Businesses, too, need to have a certain turnover for availing a Loan Against Property. Today, most lenders spell out the eligibility norms on their websites.

Documents required for Loan Against Property

While the list of documents varies across lenders, salaried individuals need the following financial documents for availing Loan Against Property:

Income tax returns of the previous 2-3 years or the salary slips, or Form 16 from the employer
Bank statement of the previous few months

Businesses need to produce:

  1. Audited ITR financials
  2. Bank statements of the main account along with other accounts as mentioned in the balance sheet
  3. Certificate of incorporation for companies
  4. Partnership deed and partnership authority letter (in case of a partnership firm)
  5. Shareholding patterns in case of private/public limited company
  6. Passport-size photographs


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