- In most cases, banks do not provide over 60% of the property value as a loan or over 50% in the case of commercial properties. In such cases, a non-bank lender like DVR Financer is a great option. They not only offer higher amount of loans but often offer a better loan rate for your property as well.
- You may be charged a processing fee between 0.5% - 1% depending on the terms the lenders extend
- It goes without saying that this loan is best when you have a well chalked out plan on your repaying abilities. The consequences of not paying the loan can result in the obvious loss of property.
- If you're a salaried individual, you won't get a tax rebate for this loan. But if you have a business and you can prove that the loan was taken to improve your venture then, you can claim a tax deduction on the interest amount.
- If you are a business owner, some financial institutions can increase your eligibility limit by offering turnover surrogate schemes. Make an inquiry about this when you apply.
- You can also increase your eligibility amount by applying with multiple properties like residential and commercial properties, residential plots, farmhouses, industrial property, hotels, guest houses, nursing homes, hospitals etc.
If you've weighed all the pros and cons and think this will be a good option, here's how you can check your eligibility criteria and get your documentation in order. Loan against property can be availed by self-employed businessmen, manufacturers, retailers, traders and service providers, although there are restrictions for startups. Loan can be availed by proprietorships, partnerships, Public & Pvt. Ltd Companies. Business like those for auto components, auto manufacturing companies, educational institutions, schools, colleges and service sectors are some of the prime beneficiaries of this loan. You should be between 21 and 65 years and have a good credit score too.
You'll be required to produce identification documents like PAN, voter's id, passport, electricity or telephone bill, financial statement in case you are self employed and income statement for the last three years if you are salaried.
Details about the Application Process
You'll need to start by choosing a financial institution. Check out reviews of those who have great customer service and enjoy a good reputation in the market. While word of mouth is a good bet, players like DVR Financer which provide a great value for service during the loan tenure will be a good lender to go with. The overall process may take as few as five business days - where your assigned relationship manager examines your documents and eligibility criteria on day 1, you submit your documents and wait for a total of 3 days for financial appraisal and finally on day 5 your loan may be sanctioned!
Other important things to know
In order to reduce your debt obligation, you may want to do a balance transfer of your loan. This entails moving your loan to an institution which provides a lower interest rate and resultantly helps you save on EMIs or a shorter tenure. To do this, the entire unpaid principle amount will have to be paid back to the original lender and you will continue to pay the remaining EMIs at a new rate to your new lender. This does involve a bit of paperwork but it can be worth the savings in the long run.