Buying a second home is like putting a new asset in the safe deposit. Although a house is a valuable investment, you should be clear about the purpose of investment. If the aim is to buy and sell later at a higher price, you should choose the location of the property carefully. For instance, if you plan to use the home on holidays only, buy a property on the outskirts. For investment purposes, choose a locality where residential demand is high. Someone looking to earn a rental income should choose a flat over a house. If you already own a house and are planning to buy another, you can pledge the existing one and take out a loan against property. A loan against property is particularly beneficial when the fund requirement is high. Interested people can get a loan against property from banks and non-banking financial companies (NBFCs). For example, NBFCs like Bajaj Finserv offer attractive interest rates on loan against property India.
Here is why you should opt for a loan against property for your next home:
Loan Against Property Features
Long repayment tenor: Compared to personal loans, a loan against property tenure is quite long. The repayment tenor ranges from 10 to 20 years. This helps the borrower to get enough time to repay the loan. It is particularly helpful when the loan is meant for commercial purposes. Opting for a longer tenor reduces the EMI burden significantly.
Lower interest rate: A lower interest rate is another benefit of the loan. Being a secured loan, the interest rate is low compared with unsecured loans such as credit cards and personal loans. Before approaching a bank or NBFC, do your homework to get the lowest rate.
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High loan amount: We all know that the value of a property is quite high, especially if it is a commercial one. As the loan is for property investment, it serves the purpose well. The loan amount solely depends on property valuation. As a result, you can get a large amount against the property.
Easy repayment: As the amount you are borrowing is large, there is no hurry to pay off the same immediately. The flexible repayment option helps you choose a convenient tenor and pay off the loan amount through equated monthly installments (EMIs). Besides, if you want to close the loan account early, all you have to do is make a prepayment and part pre-payment at a minimal charge.
Loan Against Property Eligibility Criteria
To be eligible for a loan against property, you will need to fulfill the following criteria:
- You should be a salaried or self-employed professional.
- If salaried, you should be between 33 and 58 years of age.
- You need to be a resident of India and own a property in your name.
Loan Against Property Documents Required
Your property documents are very important to get the loan approved. Thus, having all of them ready is necessary. You need to have the following documents in order at the time of application.
As proof of residence (any one of the following):
- Aadhaar card
- Voter ID
- Ration card
- Electricity bill
- Telephone bill
As proof of identity (any one of the following):
- Aadhaar card
- Voter ID
- Driver’s license
- Employee identity card
For income proof:
- Latest bank statement or passbook showing past six months’ salary details
- Past six months’ salary slips showing all deductions
- Form 16 (last two years)
- Copy of the documents of the property to be pledged
Along with these documents, you’ll also need to have a good CIBIL score. Every lender checks the borrower’s CIBIL score before approving them a loan. Having a good credit history not only helps you get the loan approved but also makes the process hassle-free.
However, keep in mind that, as it is a secured loan, the bank has the authority to auction the property and recover the dues if you fail to pay the EMIs.
By meeting these criteria and conditions, you can easily get a loan against property. Compare the rates across lenders and choose the right one for you. NBFCs likeBajaj Finserv brings you pre-approved offers for home loans, personal loans, EMI finance on different products, and other financial services. Not only does this simplify the process of availing financing but also helps you save on time.
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