Results 1 to 4 of 4

Thread: Loan Against Property vs. Personal loan

  1. #1
    PW Stalwart v.r.s.nathan's Avatar
    Join Date
    Apr 2009
    Location
    Nagpur
    Posts
    250

    Arrow Loan Against Property vs. Personal loan

    What is a loan against property?
    A loan against property (LAP) is exactly what the name implies - a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property's market value, usually around 40% - 60%.
    Loan against Property belongs to the secured loan category where the borrower gives a guarantee by using his property as security.

    What purposes can I take a loan against property for?
    Loan against Property can be taken for following purposes:
    1. Expanding your business
    2. Getting your son/daughter married
    3. Sending your son/daughter for higher studies abroad
    3. Funding your dream vacation
    4. Funding medical treatments.

    What kind of properties can I mortgage for a loan?
    You can normally take a loan against your self-occupied or rented residential property. This could be a house or even a piece of land.

    What is the eligibility criteria to get a loan against property?
    This criteria will vary from one bank to another. However, from all the host of factors, the common factors that all banks look at are:
    1. Your income, savings, debt obligations
    2. Cost/value of the property mortgaged
    3. Your repayment track record for other loans, credit cards etc.

    What are the normal interest rates and tenure for repayment offered for a loan against property?
    Interest rates on loan against property range from 12% -15.75% and the loan tenure can be up to 15 years.

    How is a loan against property different from a personal loan?
    Loan Against Property:
    * The individual takes the loan by mortgaging the house property.
    * One of the cheapest retail loans after home loans; usually in the range of 12% - 16%.
    * Since the rate of interest is lower, frequently LAP Equated Monthly Installments (EMI) turn out cheaper.
    * Maximum loan eligibility is determined primarily by the value of the property and income.
    * Maximum loan tenure for LAP is up to 15 years (180 months).
    * Secured loan.

    Personal Loan:
    * An individual can take a personal loan for personal use without any security or guarantor.
    * Higher interest rates compared to LAP; usually issued at interest rates in the range of 16% - 21%.
    * Since the rate of interest is high, the Equated Monthly Installments (EMI) for personal loans are high.
    * Maximum loan eligibility is determined primarily by an individual's income.
    * Maximum loan tenure for personal loan is up to 5 years (60 months)
    * Unsecured loan

    What documents are required for applying for a loan against property?
    Most banks and financial institutions typically require the following documents. However, this list may vary from bank to bank:

    Salaried Customers:
    * Application form with photograph
    * Identity and Residence Proof
    * Latest Salary-slips
    * Form 16
    * Last 6 months bank statements
    * Processing fee cheque

    Self Employed Professionals:

    * Application form with photograph
    * Identity and Residence Proof
    * Education Qualifications Certificate and Proof of business existence

    * a. Last 3 years Income Tax returns (self and business)
    b. Last 3 years Profit /Loss and Balance Sheet

    * Last 6 months bank statements
    * Processing fee cheque

    Self Employed Businessman:
    * Application form with photograph
    * Identity and Residence Proof
    * Education Qualifications Certificate and Proof of business existence
    * Business profile
    * Last 3 years Profit /Loss and Balance Sheet
    * Last 3 years Income Tax returns (self and business)
    * Last 6 months bank statements(self and business)
    * Processing fee cheque

    Source - economictimes.com



  2. #2
    PolicyWala Member
    Join Date
    Apr 2009
    Location
    Lucknow
    Posts
    32

    Default

    Good Info. Thanks!

  3. #3
    PolicyWala NewBie
    Join Date
    Apr 2009
    Location
    Kanpur
    Posts
    19

    Default

    Good Info.

  4. #4
    PW Stalwart v.r.s.nathan's Avatar
    Join Date
    Apr 2009
    Location
    Nagpur
    Posts
    250

    Default

    Quote Originally Posted by Raja View Post
    Good Info. Thanks!
    Quote Originally Posted by Abhisar View Post
    Good Info.
    You are welcome - Guys!


Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •