Top Mistakes to Avoid While Taking a Loan Against Property
You can take a loan against an undisputed property by using it as collateral. Once you repay the loan completely, you can get back your ownership of the property. The funds you receive from the loan can help meet different financial requirements. These can include urgent medical expenses, your child’s higher studies, marriage, business expansion, debt consolidation and working capital. So, first, you need to know the different ways in which you can use the loan. Based on the fund requirement, you need to borrow a loan of a suitable amount. You shouldn’t make a mistake in evaluating your needs.
Besides, here are some other mistakes to avoid when you consider taking a loan against property.
Not Checking the Eligibility Criteria
You can usually take a loan against commercial property or residential property. But do you qualify for the loan? Check the eligibility criteria. Top lending banks offer LAP to both salaried applicants like government and corporate employees and self-employed applicants like lawyers, doctors, traders, CAs and small business owners. Most importantly, the applicant needs to be a resident Indian. The age limit for salaried applicants is usually 28-60 years. The age limit for self-employed applicants is generally 28-70 years.
If you need to boost your eligibility, you can add one earning co-applicant. This can sometimes help you qualify for a higher loan amount. A woman co-applicant can help you get competitive interest rates. The co-borrower can be your immediate family member or spouse, salaried or self-employed and 18-65 years old.
Not Knowing the Required Documents
Learn about the documents needed to apply for a loan against a commercial/residential property. Some common documents include:
- Fully filled out and signed application
- Property documents
Salaried applicants must submit these additional documents:
- Identity and residence proof like Voter ID card, PAN card, Aadhaar card or Job Card issued by NREGA or specified by IHFC every once in a while
- Income proof like 3-month bank statement, latest Form 16 and last 2 months’ salary slips
Self-employed applicants must provide these additional documents:
- Residence and identity proof like Aadhaar card, Voter ID card, PAN card, etc.
- Income proof like the last 2 years’ B/S (with schedules) and P&L accounts, 6-month bank statement, last 2 ITRs
Self-employed non-individuals need to provide the following additional documents:
- Identity proof like MOA or AOA of the company or as denoted by IHFC from time to time, copy of GST registration, PAN card, etc.
- Income proof like bank statements of the last 6 months, last 2 ITRs, latest 2 years’ P&L accounts and B/S (along with schedules), etc
Not Checking the Benefits Offered by the Lender
It’s important to know all the benefits offered by the lending bank so you can avail them. Leading banks offer:
- Loans from ₹5,00,000 to ₹ 10,00,00,000 for both small and big financial needs
- Availing of low interest rates on loans against commercial properties; the option to choose between floating and fixed interest rates
- Loan disbursal in just 72 hours
- Availing of a balance transfer facility to lower your EMI burden by helping you access competitive interest rates besides tax benefits
Not Learning About the Charges
For home loan against property, you need to know about all the applicable charges. These can include an application or login fee, a processing fee, prepayment charges and a conversion fee. Make sure to pay the EMIs regularly on time to avoid a late fee.
Just avoid these mistakes when you apply for a loan against property. Make sure to read all the terms and conditions of the lending bank before submitting the loan application.