People who have a property and are in need of urgent funds usually go for Loan against property which is also known as loan against land. It is easy to procure, and the amount is giving in a lump sum.
Under loan against property, your property paper will be taken over by bank until the full loan amount is paid back, which is done through monthly EMI payments. The lump-sum amount received can be used for personal or commercial purposes.
The applicant has to be aware about the procedures for applying for the loan in order to proceed smoothly. There are certain things you have to aware of with regard to loan against property which will help you to make a better decisions.
Here is a list of things that must be checked before applying for a loan against land:
Check your property value
Whether it is your commercial property or your residential property always check it’s value before applying for a property mortgage loan. If your property value is less than the loan amount you have applied for, your loan will not get passed.
In such a case, you might have to opt for a lower loan amount and along with other financial options in combination.
Ability to repay
Banks and financial institutions look at the income and repayment capacity of the borrower before it passes the loan against property. Depending on the capacity of the borrower to repay, the bank will fix the loan tenure.
So if you have a fixed income than banks will not hesitate to provide you with the loan because of assured EMI payments. Else the bank would have to sell the property in case of default in payments.
Co-applicant in the property mortgage loan
If you alone do not have the capacity to repay the loans than consider getting a loan against property along with a co-applicant. The loan providing bank will do a background check of the co-applicant and its ability to repay the loan along with you.
Ownership of property
If you are the single owner of the property, then you will get the loan against property without any issue. But it the property is co-owned, and the co-owner does not agree with taking a loan then your loan will be rejected.
Hence it is important that if your property is co-owned, then permission must be taken from the co-owner before applying so that it does not complicate matters in the future.
Know the fees
Apart from interest rates of the property mortgage loan, banks charge others fees like processing fees too. Along with processing fees, agent fees, pre-closure charges are also applied, which you must be aware of.
Hence you must get yourself acquainted with charges and fees you would have to pay before applying for a loan against property.