• Loan Against Property is a secured mode of finance used by individuals and businesses
  • You get funds by mortgaging your residential or commercial property
  • You can get funds equivalent to a certain percentage of the property’s value
  • Loan Against Property interest rates are competitive than unsecured loans

Read on to know the various aspects of a Loan Against Property and its benefits.

Purpose of a Loan Against Property

Loan Against Property serves different purposes for individuals as well as businesses. It is often used by individuals to address essential life goals such as higher education of children, marriage or making a down payment for a home or car.

On the other hand, businesses use it to avail funds for expansion, R&D, product development and marketing and promotion among others. Businesses also use it to bridge gaps in cash flow and fund new requirements. Generally, this loan is given against residential or commercial properties.

Benefits of Loan Against Property

various benefits of a Loan Against Property are:

  • Competitive interest rates: Since a Loan Against Property is a secured mode of finance, the interest rates are comparatively lower. This results in lower EMIs, making it easy to for the borrower to address other financial needs without straining his/her budget.
    • Loan against property
  • 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. There’s also a certain age (minimum and maximum), criteria for lending. 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:

    • Audited ITR financials
    • Bank statements of the main account along with other accounts as mentioned in the balance sheet
    • Certificate of incorporation for companies
    • Partnership deed and partnership authority letter (in case of a partnership firm)
    • Shareholding patterns in case of private/public limited company

    Along with these documents, one needs to attach photocopy of:

    • PAN card
    • Identity proof
    • Address proof
    • Business continuity proof
    • Passport-size photographs

    Just like eligibility, the list of documents needed are present on the lender’s website.

    Thus, a Loan Against Property can serve a range of personal and business needs. To know more, click here.