Consider Carefully Before Taking A Loan Against Property

By Author: Fayeem
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You can take a Loan Against Property in Delhi not only for home renovation or commercial properties but also against a plot of land. In fact, it is considered as the safest proposition for the banks as they have collateral of the property in support of the finance they provide.

And, a salaried person can avail it for various purposes such as educational needs of his/her children, medical expenses, home renovation and many more, through mortgage loans. At the same time, the business enterprises opt the Loan against property as collateral for Business Loan in Delhi and for procuring working capital requirements. In fact, in present time, a loan against property can be easily obtained due to its secure nature. Banks usually maintain a margin, ranging from 50-90% of the property value also known as Loan-to-Value, while sanctioning a Loan against Property. Further, this facility is becoming popular because the borrower can utilise the property despite mortgaging it in favour of the bank.

Eligibility for a loan against property

Current income - For a regular employee, ...
... the salary slips of the last three months and bank account statements of the previous six months are required. And, in the case of self-employed professionals, financial statements such as Balance sheet and Income statements are needed. You must complete these financial statements with the bank statements enabling the banks to co-relate them.

Continuity of Employment - A letter from your employer which proposed that the borrower is employed with them in addition with the income tax form (Form 16), and IT returns of the past two years should serve. A self-employed person has to submit proof of doing business such as GST registration certificate, partnership deeds, and certificate of incorporation.

Current Obligations - One should have a net income of 50% after accounting for all the EMIs, including the proposed one for the Loan against Property. And therefore, a borrower needs to disclose his/her current obligations.

Credit History - The lending banks are members of CIBIL (Credit Information Bureau India Limited), who can pull out the records to determine your credit score. Normally, a credit score in the range of 600 and over is acceptable.

Value of the Property – the eligibility of purchasing a Loan Against Property highly depends upon the value of your property. An LTV ratio is in around 40-70% of the location of your property is acceptable for most mortgage loan scenarios.

Legal Scrutiny Report - To carry out the search of the property, banks have panel advocates in the respective Sub-Registrar office to ascertain the chain of ownership. Further, it enables them to determine if there are any impediments on the property. This search is critical as it allows the banks to understand whether you have the eligibility to create the evenhanded mortgage in favour of the bank.
Age of the Borrower - At the time of application, the minimum age of the borrower should be 21 years.