If the property against which you are availing a loan has other owner(s), all of them will need to become joint applicants to get the loan. You can avail a loan against any kind of freehold property; a house or a land plot. Also it isn’t important whether you reside in that house or have rented it out. The most vital condition is that the property title should be unambiguous and there should not be any impediments.
The bank will verify all the documents linked to the property title, also ask you for residence proof like ration card, telephone bill, electricity bill. You will also need to submit a copy of the identity proof like a voter ID, PAN card or passport. If you are working, provide all bank statements for the last six months, while a self-employed individual needs to submit authorized financial statements for the last two years.
The amount loaned by the bank will differ for each person as it depends on several factors, counting the job profile and borrower‘s age. Typically, the income proof of last three years is needed. Hence, the minimum age is 24 years. Also, lenders favour that the loaned amount be entirely repaid while the borrower is working, and this is why till loan maturity the maximum age in case of a waged person is 60 years, while for persons with self employment is 65 years.
The bank will also verify your credit history via the Cibil and investigate your repayment track record. On the basis of your credit score and the fore-mentioned documents, the bank will determine your repayment ability. If you have ever defaulted on any payment, it can diminish your chances of availing a loan. If the bank is satisfied, you will be offered the loan, which will usually range from 40 to70% of the property value.
Why is it feasible?
The major reason people normally don’t select to mortgaging their house is that they do not want to take the threat of the bank taking the property possession in case they are powerless to pay the dues. Another drawback is that there aren’t tax incentives whilst paying the EMIs, not like in home loans though, this is just for a waged person. A businessman can assert tax deduction on the full interest paid on the loan if he is able to prove that the loan was authentically utilised to develop his business.
However, this tax advantage is also available if the businessman takes a loan against gold or shares/securities that he owns. In either case, if you default in the payments, the bank will sell the pledged gold or shares to recuperate its dues, which is a lesser loss than losing your home. Nonetheless, if you require a huge amount of money which can be lakhs or crores, the only feasible helpful asset that you can look to pledge is your own house.
I hope this post about property loan in NCR was helpful and has educated you about the nuances of loan against property.