The introduction of property loans to the Indian financial market back in the years revolutionised how households borrowed. These loans came with an opportunity for unrestricted use, with only property as mortgage and a few other requirements needed for availing funding. A loan against property continues to be one of the preferred financing options for many when it comes to high-quantum borrowing. Several other features allotted with these loans enhance the overall borrowing experience for individuals. For instance, a tenure spanning over up to 3 decades means affordable repayment of the advance in easy EMIs.
Several other features and factor make the advance both useful and easy to avail. Nevertheless, there are a few aspects that you must know when borrowing the advance. It can both help in easy loan accessibility as well as useful management of the liability. Let’s check them out.
Applicability of Property Types for Mortgage
When availing a loan against property, you can utilise either a residential or a commercial property for mortgage creation. When choosing the type of property for mortgage creation, keep the following things in mind.
– Choose a commercial property only when availing financing for business use.
– When seeking a property loan for personal expenses, like wedding, education, medical expenses, travel, etc., you must ideally go for mortgage creation on a residential property.
Property Merits for Security Creation and Loan Sanction
Some individuals seeking funding through a property loan may be owners of more than one property under the respective types. In this case, one needs to be aware of a few instances for appropriate property selection here too. Given below are some of them.
– It can be wise to select a property with a higher current market value than otherwise, which increases the chances of loan amount approval of your requirement.
– Choosing a property in a well-placed location can better your chances for higher loan approval.
– Available amenities in the locality mean enhanced property valuation and higher chances of availing the required loan amount.
– Property must not carry any severe damage when being mortgaged.
– It should carry a remaining life span of not less than 20 years.
– The property must also be free of all encumbrances when being presented for mortgage creation. Thus, property tax receipts and any other proof is mandatory when submitting your loan against property documents.
The Concept of LTV
LTV or Loan to Value Ratio is a concept that underlies the structural make of mortgage financing. It refers to the maximum percentage being financed as a loan against property of any other secured loan from the collateralised asset’s current market value. With property loans, LTV with some best lenders can go up to 95% easily. It is, however, wise to choose a lender offering low LTV as it improves one’s chances of receiving quick loan approval due to enhanced property eligibility.
Mortgage Release and Property Rights Restoration
Once the mortgage on an asset is created under a property loan arrangement, it continues until full and final repayment of complete loan liability to the lender. On complete repayment of the advance, the lender releases such property of mortgage and issues a NOC to the borrower, ensuring complete restoration of property rights to the borrower.
Contrarily, non-repayment of the advance leads to property auction proceedings for loan recovery.
Along with all these features and aspects, you must also know that application for a loan against property has been simplified too with an introduction of the online mode. You can simply visit the official website of your selected lender and navigate to the property loan page. From there, go to the online application form and fill it with all the required details. Make sure to keep all information in the page accurate, which shall help enable unhindered processing of your application for early approval.