Do You Know the Types of Loan Against Property in India_

People invest in a property to either save their money or earn money by selling it at a premium. And there are many ways where assets are assisted in times of need. One such method is when an asset becomes perfect collateral for a loan.

One can also apply for Loan Against Property to get money by mortgaging their property. Due to the collateral, there are a lot of interest savings that come with such a loan. 

Housing Finance Companies have brought amazing types of Loan Against Property that one can avail in India. 

Compare the different types to make an informed decision. Scroll down to know different kinds of LAP offered by various companies offering home loans.

Registered Property along with Maps

Banks consider this kind of property the best mortgage because such properties are clearly sanctioned with proper maps by town planning authorities. Thus, these properties are clear and legal, without any risk of disputes.

Registered Properties without Maps

These are also registered and legal properties but do not contain any maps. Due to this, banks and NBFCs considered other mitigating factors such as sale deeds and ATS with town planning. However, these properties are at internal risk, so the applying should be done with the guarantor or co-applicant.

GPA or General Power of Attorney

GPA provides the right to stand on behalf of other people and manage their assets for the applicant. However, banks and BBFC are not supposed to grant the Loan with GPA. For this, the applicants need to have legal authorities of their property or external financiers with high-interest rates or opt for other Housing Finance companies.

Lal Dora Land

Property of Delhi landscape with 360 villages falls under Lal Dora land for residence and livestock rearing. The loan against property is not provided to these properties by Banks and NBFCs.

Agricultural Land

Agriculture lands are used for only agricultural purposes; one cannot use this property for other purposes; hence it is difficult to convert them into non-agriculture lands. Furthermore, due to many restrictions, the Bank does not provide Loans against property without income proof to agricultural lands.

Besides this, different prices of loan against property interest rates can be availed based on the nature of the owner’s relationship with their property, and the interest rate can be charged according to this. Below are the interest rates that are generally charged:

Loan Against Self-Occupied Residential Property

In the case of self-occupied residential property, the banks and NBFCs can avail up to 65% of the fair market value of the available property.

Loan Against Vacant Residential Property

The bankers may perform some inquiry process in case of unoccupied property or if there is any infringement on it. For such property, the Loan of 50% of the present fair market value is granted by Banks.

Loan Against Rented Residential Property

If someone is applying for a loan on their rented property, the Banks and NBFCs will inquire about the property’s total amount of rent in a financial year. Then, a loan of 50% of the fair market value of the property is given.

Loan Against Self Occupied Commercial Property

In this case, before approving the loan application, the banks and NBFCs will inquire about the business and its activity in a financial year. Then, up to 60% loan is availed of the present market value of the property.

Loan Against Rented Commercial Property

Before verifying the Loan against rented commercial property, the Bank and NBFCs may inquire about the total amount of rent availed from the commercial property. After the inquiry, 60 % of the present market value for that property can be availed.

Loan Against Residential Plot

Some people avail Loan on the mortgage of the residential plot. The amount of loan is decided on the location of the plot, and up to 40%, fair market value can be availed of property.

Loan Against Mixed-Use Property

Some people apply for a loan against the property on the mortgage of various properties like commercial, residential, rented, or residential plots; it is known as a Loan against Mixed-Use property. The amount of the loan is based on the use of the property. Up to 55% of the fair market value is availed.

Once the verification and sanction of the Loan are done, the burrowers can ask for the details of floating interest rates and fixed interest rates to manage the amount of repayment.

Summary

These different types of loans against property can help beneficiaries get liquid money against their property at the time of financial needs. The amount of loan is decided on the present market value of the property by banks and NBFCs. Therefore, one can easily apply for loans from those banks or NBFCs with the best offers for LAP. All you need is to fulfill the loan against property eligibility criteria and other required documents to get the benefits of LAP.