Loans against property, or mortgage loans, are secured loans where borrowers have to pledge their property (residential or commercial) as collateral. Interest rates offered on these loans range from 9.80% p.a. to 14.50% p.a. while the repayment tenure offered by lenders is generally between 2-20 years.
Listed below are the interest rates offered by reputed financial lenders along with other key details of the product:
|Lender’s Name||Interest Rate||Loan Amount||Tenure|
|Capital First||As per the terms and conditions set by||Rs.5 lakh – Rs.10 crore||Up to 20 years|
|HDFC Bank||9.90% - 12.40% p.a.||As per the terms and conditions set by HDFC Bank||Up to 15 years|
||Up to Rs.3.5 crore||2 – 20 years|
|ICICI Bank||9.80% - 11.90% p.a.||Up to Rs.5 crore||Up to 15 years|
|State Bank of India||9.90% - 11.45% p.a.||Up to 7.5 crore||5-15 years|
Customers who are new to the process of availing a loan against property can keep the steps mentioned below in mind:
Customers can make use of the loan against property eligibility calculators prior to applying for the loan. The eligibility calculator will take into consideration details such as one’s income, the value of the property and several other factors. Using the eligibility calculator, the customer can assess the loan amount he/she will be eligible to avail.
As part of planning one’s finances prior to applying for the loan, one should calculate the EMI amount and know how much he/she would have to set aside from their monthly net income to pay for the monthly installments.
The customer has to ensure that all the property certificates are in place and are in his/her name to avail the loan. Some of the property certificates that the lender would request to submit are the sales deed, lease deed, registration certificate, House Tax Return certificate, approved building plan that has been attested by the Municipal Corporation, etc.
Make a comparative analysis between lenders offering a favorable loan amount relative to the interest rate. While analyzing, check for the fees and charges being levied by each lender, along with the loan tenure being offered.
Customers can calculate their eligibility and the EMIs on the website of BankBazaar and make a suitable decision on the loan amount to be availed and the monthly installments based on their finances.
Listed below is the general process to avail a loan against property:
To plan their finances in advance, customers can facilitate the use of the EMI calculator tool to know how much they would have to set aside every month to repay the loan. The EMI calculator takes into consideration factors such as the loan amount availed, the interest rate applicable, the processing fee, and the tenure.
Let’s assume that Mr. Raidu availed a Loan Against Property of Rs.2.5 lakh for a tenure of 12 months, with an interest rate of 10.25% and processing fee of 2%. Taking into consideration the principal amount, the interest, processing fee divided by the tenure, Raidu will have to pay an EMI of Rs.22,095 to repay the loan during the tenure.
|Year||Principal Paid (A)||Interest Paid (B)||EMI (A+B)||Outstanding Balance|
|2019||Rs.1,42,496||Rs. 12,170||Rs. 1,54,666||Rs. 1,07,503|
|Jun||Rs. 19,804||Rs. 2,292||Rs. 22,096||Rs. 2,30,196|
|July||Rs. 19,985||Rs. 2,110||Rs. 22,095||Rs.2,10,211|
|Aug||Rs.20,168||Rs. 1,927||Rs. 22,095||Rs. 1,90,042|
|Sep||Rs. 20,353||Rs. 1,742||Rs. 22,095||Rs. 1,69,689|
|Oct||Rs. 20,540||Rs. 1,555||Rs. 22,095||Rs. 1,49,149|
|Nov||Rs. 20,728||Rs. 1,367||Rs. 22,095||Rs. 1,28,421|
|Dec||Rs. 20,918||Rs. 1,177||Rs. 22,095||Rs. 1,07,503|
|2020||Rs. 1,07,503||Rs. 2,975||Rs. 1,10,478||Rs. 0|
|Jan||Rs. 21,110||Rs. 985||Rs. 22,095||Rs. 86,393|
|Feb||Rs. 21,303||Rs. 792||Rs. 22,095||Rs. 65,089|
|Mar||Rs. 21,499||Rs. 597||Rs. 22,096||Rs. 43,591|
|Apr||Rs. 21,696||Rs. 400||Rs. 22,096||Rs.21,895|
|May||Rs. 21,895||Rs. 201||Rs. 22,096||Rs.0|
Give below are some key points one can take into consideration to reduce the interest rate of a loan against property:
Listed below are the general documents that the borrower will have to submit:
Ans: Yes, it is possible provided that the co-owner of the property is the co-applicant as well. One can even avail a higher loan amount when availing a loan against a joint property.
Ans: Opting for a top-up will be beneficial in many ways as you wouldn’t have to go through the documentation and verification process again and the interest rate and EMI might be lower as well.
Ans: Only if you do not have an existing loan with the same lender.
Ans: While it is true that the EMI will be lower if you opt for a higher tenure, choosing a shorter tenure will result in your repaying the bank a lot less money due to the applicable interest rate. The longer the tenure the higher will be the interest that you will have to repay the bank.
Ans: You will have to pay the processing fee and applicable service tax and other charges when availing a loan. If you wish to close the loan before the set tenure, you will have to pay the foreclosure charges.
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