What is a Loan Against Property?
A LAP (loan against property) or mortgage loan is a variant of a secured loan sanctioned by financial institutions against any asset pledged as collateral. The list of assets that financial institutions accept includes owned real estate such as houses or lands and numerous other commercial properties or premises.
The asset deemed as the collateral while acquiring a property loan remains the collateral with the financial institution lending it until the customer repays the entire property loan is repaid.
Anyone in need of a loan against property can avail of it from financial institutions by pledging their property as a security or collateral. LAPs facilitate individuals to use their property’s locked-up value to meet any of their expenses.
The amount sanctioned for a loan against property depends on the customer’s collateral property’s value. However, once the loan has been sanctioned, customers can use it to fulfil any fund-related obligations as per their requirements.
Which Factors Affect Loan Against Property Interest Rates?
Interest rates play a crucial role in loans, primarily because they add to the overall repayment of any borrowed loan. Here are some key factors which affect loan against property interest rates.
The repayment tenure of a loan determines the interest rate charged by the lender. The shorter the return period, the higher the interest rate charged.
The interest rates also depend on the variety of property that the borrower wishes to pledge as collateral. Different types of property, such as residential property or commercial property, feature different rates of interest.
The credit score is also a significant factor in determining the interest rate of loans against property. Any individual who wishes to acquire a loan against property featuring a lower interest rate must have a credit score of 700 or above.
Interest rates also depend on the applicant’s age, occupation, monthly income, etc.
Why choose Loan Against Property (LAP) for your Business?
Loans against property (LAP) or property loans are secured loans provided by lenders against the borrower’s property (residential/commercial/industrial/land). These loans can be used for business expansion. The rates and loan amounts differ based on your business, income, and property.
Lenders on Yubi provide loans against property for business purposes in the form of term loans or overdraft facilities. The loan can be used to meet working capital, expansion plans, purchase equipment, or refinance existing loans. Yubi’s lender partners’ LAP options are flexible, easy, and quick to secure.
Benefits of Applying for Business Loan Against Property (BLAP) on Yubi
- Choose from 250+ Lender Options Leading to Best Rates
Yubi is a reliable platform that features over 250+ lender options, each of which leads to the best rates.
- Up to 5x Faster TAT as Loans are Processed Digitally
Since any business mortgage loan is processed and sanctioned digitally, customers save tons of time. When opting for a BLAP from Yubi, the turnaround time or TAT is 5 times faster than other outlets’ BLAP sanction procedures.
- Liquid Income Considered by Some Lenders
Yubi features over 50 property loan lenders from which customers can avail loans, and some even consider liquid income, which is the revenue any business generates that can be used to cover current business-related expenditures.
- Lender Options for Every Kind of Requirement and Profile
Thanks to the wide range of lenders featured on the platform, Yubi offers numerous options for various BLAP requirements and profiles.
Repayment Tenure for a Loan Against Property
Similar to any other type of loan, the borrower is required to pay back the borrowed amount, including the interest, within a stipulated time period. In the case of a loan against property, the repayment tenure can be up to 12 years.
Even though the interest rates are substantial, such a long repayment tenure makes it easier for lenders to pay back the borrowed amount.
Why Choose Yubi for Loan Against Property?
Even though numerous online platforms, as well as banks, offer loan against property, opting for Yubi when considering to acquire a property loan is beneficial to the customer for numerous reasons. Here are some of the most prominent ones:
Higher Loan Amount
Yubi offers loans of up to 90% of the overall value of the customers’ property, depending on its type. As opposed to other outlets which offer lesser amounts of loans, Yubi loans ensure that the customers’ fund requirements are fulfilled without them needing to opt for other ways of financing.
Long Repayment Tenure
Loan against property or LAPs offered on Yubi feature repayment periods up to 12 years, depending on its type. This benefits customers who wish to repay the borrowed amount in small instalments.
Hassle-free Documentation Process
Since Yubi is a web-based platform, acquiring loans from the platform involves a hassle-free documentation procedure, which makes it easier for customers to enrol and acquire a LAP for themselves in times of need without hassle.
Yubi boasts of reliable lenders, including renowned names like ICICI bank, Kotak Mahindra Bank, SBI, Bank of Baroda, and many more.
How Much Loan Amount does Yubi Offer?
Loan of up to 90% of the value of your property can be sanctioned, depending on the type of the property.
It is important to note that a borrower’s assets are not considered as income as many make the mistake of believing that if they own properties worth 10 crores, the lender will be happy to give them a loan. This is not the case. A borrower needs to have a regular flow of steady income for the lender to extend even the first rupee. Hence, it is important to have a regular income rather than having tons of assets to acquire a loan.
Every individual looking to acquire a property loan or any other loan must pay an additional processing fee. Depending on the lender, the processing fee ranges from 0.5% to 1.5%.
Individuals can avail up to 90% of their residential property’s market value. If they pledge a commercial property as collateral, they can receive approximately 60% of their property’s market value.
Numerous loans are offered under the loan against property scheme. Here are some of them:
- Loan against residential or commercial property
- Loan against property for self-employed individuals
- Loan against property for home renovation
- Loan against property for salaried employees
- Loan against property for education
- Loan against property for weddings
- Loan against property for chartered accounts
Loan against property for debt consolidation
According to Section 37 (1) of the Income Tax Act, a loan against property is not tax-deductible, irrespective of whether it was made for personal or business purposes.
To acquire a loan against property or mortgage loan, the customer must pledge any of their assets as collateral. The following types of properties are accepted as collateral when it comes to LAPs:
- Residential or Commercial Property
- Property with multiple owners
A loan against property can be used for multiple purposes. Here are some of them:
- Finance higher education
- Business expansion
Pay for medical emergencies
The processing of the loans usually takes 10 to 15 working days once all the documents are submitted. It also depends upon your profile and documentation.
Different outlets offer different methods following which customers can know whether their loan against property has been approved or not. Most of them provide customers with a serial number using which they can check or track the status of their loan application.
Yes. The lender is required to open an overdraft facility-enabled account which will then be assigned a limit. Based on the approved limit, customers can withdraw the sanctioned amount from the overdraft account whenever they require.
Yes. A LAP or mortgage loan can be acquired against residential property, industrial property, and commercial property. If it is a residential property, it could be a rented or self-occupied property.
Yes. The property has to be insured against fire, flood, earthquakes and other appropriate hazards during the tenure of the loan.
Yes. Borrowers can prepay or foreclose the acquired loan against property. Whether any penalty or any other charges are required or not depends on the lender’s policies.
The loan against property can be prepaid along with the pre-payment charges. Usually, the lenders charge 2 – 3% of the principal prepaid.
Yes. Holders of loan against property can sell their mortgaged property. However, the only condition is that they clear the balance amount at once.
Yes, applying for a loan against property is possible if the property in question is a joint property. The only condition is that the co-applicant of the loan should be the joint owner of the mortgaged property.
Almost every financial institution or lender offering loan against property charges a prefixed application fee. The fee includes the charges for the property’s evaluation and the legal verification procedure.
Yes. There are a few financial institutions and lenders who offer loan against property to non-resident Indians. However, it all depends on the lender’s terms and conditions from which you wish to take the loan.
To avail a loan against property, individuals can cite personal, or business needs such as business expansion, funding a wedding, paying medical bills, debt consolidation, and many similar reasons.
Yes. According to the Reserve Bank of India‘s directive, banks offer a moratorium. Moreover, the bank will not deduct from borrowers late payment charges during the moratorium period.
Individuals who wish to avail the best loan against property should follow the given tips:
- Before applying for a loan against property, individuals should ensure that they fulfill the eligibility criteria.
- Individuals should ensure that they have all the documents required for the loan-acquiring procedure.
They should do proper research by comparing loan schemes offered by multiple lenders and choose the best one which fulfills their requirements.
Once an individual has been sanctioned the amount for a loan against property, the repayment period will start in the month after the month when the loan was disbursed by the lender.
Yubi offers up to 5 times faster turnaround time or TAT since all loans, including loans against property, are processed digitally. Moreover, the processing of the loan takes only 10 to 14 days once the customer has submitted all the required documents.
Every individual applying for a loan against property on Yubi should provide the following documents – PAN card, proof of identity, proof of address, proof of residence ownership, proof of business existence, last 3 years’ income proof (income tax returns), audited financials of last 3 years, last 1 year’s bank statements and GSTR returns, registered sale deed or lease deed, past sale deeds chain, loan statement, KYC of co-applicants and lastly, any document requested by the lender to check and assess eligibility.
No. Different lenders offer different rates of interest even when they are featured on a single platform. Hence, every customer should research and compare the rates of different lenders to determine the best option.
Yes. If the property’s value has increased significantly after availing the 1st loan, you can apply for a top-up with the existing lender or balance transfer with a new lender who will take over the loan and provide additional loan basis the latest valuation of the property.