Getting the Money you Need with a Loans against Property

The modern economy is not living up to expectations. Unemployment is high, and middle class wages have been stagnant. This has made it incredibly difficult to stay solvent. The truth is that many people are a few bad days away from bankruptcy.

If you're worried about your financial situation, you may want to look at a personal loan. By getting a loan, you can get the money that you need to live. Obviously, no two loans are ever alike. Before you apply for a Business Loan, you need to educate yourself on finances. If you know what you are looking for, it will be easier for you to make an informed decision. You should know how much money you need to borrow, and you should also know how long you will need it for.

If you're interested in applying for a personal home loan, you need to understand the concept of collateral. By offering collateral, you can usually secure a low interest rate. This will also allow you to increase the size of your loan. Collateral can take many forms. Anything valuable will work well here. To get the best results, you should consider using your home. Obviously, it's important to be as responsible as possible here. If you are careless, your home could be repossessed. Make it a priority to be on time with every payment. Keep in mind that every lender is unique. You should only work with a lender that is trustworthy and honest.

When it comes down to it, getting a personal home loan is all about defining your expectations. To get started, think about how much money you need to borrow. Avoid any lender that tries to persuade you to borrow more money than you need. Once you know how much money you are trying to borrow, you will be ready to start looking for Loans against Property.

Generally speaking, it makes sense to talk to as many lenders as you can. If you can, ask for a few quotes. Remember that it's to your advantage to learn as much as you can before applying for a loan. By shopping around, you should be able to secure more reasonable interest rates. It's important to be accurate and honest here. You should know your precise income before you talk to anyone. This will help you find a home loan that meets your demands.

Source: https://www.apsense.com/article/getting-the-money-you-need-with-a-loans-against-property.html

What you need to know about a Property Loan

A loan against property is a loan that is given against the mortgage of property. The loan is provided at a certain percentage of your property’s market value, usually somewhere between 40% and 60%.
The loan against property interest rates make them more attractive than personal loans. If you were to take a personal loan, the interest rate would be 16% – 21%. Taking a loan against property means you pay interest at the rate of 11% to 14.50%. This difference is because your property is guaranteed against the loan. If you avail the services of Finance, you can get up to 3 months off on your EMI payments.

How the Bank Goes About It

The mortgage loan process includes the following:
If the property you mortgage has more than one owner, all of you will have to apply together to get the loan.

You can take a loan for any freehold property – from a plot of land to your house. It doesn’t matter if you’ve rented out the house or if you’re living in it. For more types of loans against property, avail financial services, and you’ll get a wide range to choose from.

The bank checks all the documents related to the title of your property, like electricity and telephone bills, for residence proof. They also need identity proof like your passport, PAN card, or voter ID card. If you’re employed, they need your bank statements for the past 6 months, and if you’re self-employed, they require your financial statements for the past 2 years.

The minimum age at which you can borrow a loan is usually 24 years, and the maximum age for an employed person is 60, and a self-employed individual is 65.

The bank also reviews your CIBIL or credit score and goes through your payment track record. Keeping a good CIBIL score will increase your chances of getting your loan application approved. Based on all of this information, your bank will ascertain your capacity for repayment and provide you with the loan if they are satisfied.

Here’s Why You Should Take One

Now that you’ve understood how loan against property works, opting for one is great choice if you’re ever in need of money. Here’s why:

The tenure of an LAP (Loan against Property) is longer than most other loans. You can get one for a maximum period of 10 years. Since their rate of interest is lower, and they have such a long repayment time, it’s a cheaper option than any other loan.

Just like any other loan, you can take a LAP without disclosing your motive for the loan. Like a home loan, partial prepayment as well as full prepayment is allowed with regard to LAPs. This prepayment is generally free from penalties. If you contact Bank, they can provide you with a loan of up to 21 crores on your property. Find out more on their loan against property FAQ.

The property continues to be under your ownership even after you receive the loan. In case you are unable to pay back the loan, you can sell your property and settle the debt. This will also help you procure additional funds.

If the value of your property increases, you can refinance it to increase the loan amount. So if you’re a businessman, it’s the an excellent option for you to expand your business.

The processing of an LAP is much faster than a house loan as the property already exists. You can also continue to live in your home while making use of the mortgage money.

Your asset does not lay idle, as its value is utilised by putting it to productive use.

As a general rule, be cautious while taking out a loan; it must be backed up by solid reasons and assurances that you can repay it. If you need money immediately, a Property Loan is a simple way to procure quick, liquid cash.

Source: http://blogs.rediff.com/loanagainstproperty/2016/03/25/what-you-need-to-know-about-a-property-loan/

Loan against Property Overview

Personal Loans are usually of two types i.e. secured personal loan which is secured against the mortgage of immovable property, insurance policies, gold jewelry, investments, etc and another is unsecured personal loan which does not require you to pledge anything.

Mortgage Loan commonly known as “Loan Against Property” in India is a secured loan that is sanctioned against fully constructed, freehold residential and commercial properties.

Some of the key factors are given below for your consideration before you apply for Loan Against Property.

Purpose

Loan against Property is normally taken for funding various personal or business needs of an individual e.g.

· Business Expansion

· Education Expenses of children

· Marriage expenses in the family

· Purchase of home

· Improvement or Extension of existing Property

· Medical Treatment

· or Any other personal Need.

Eligibility

The applicant for the loan should be:-

· Minimum 21 years of age

· Salaried Individual

· Self Employed professionals / non-professionals

Applicant should be the owner of the property and all co-owner has to compulsorily be co-applicant to the loan, however the co-borrowers need not be the co-owner to the loan.

Loan Amount

Typically you can get up to 50% – 60% of the value of the property or twice your annual income (whichever is lower) as a loan against property. The maximum loan amount is normally between Rs. 5 – 10 crores, but can be extended in some cases depending on the borrowers profile

The final loan amount is dependent on host of other factors like income and regular outgoings, existing loans, repayment track record, valuation of the property by the lender, etc.

Rate of Interest

Loan against Property is normally available on Floating as well as Fixed rate of interest. Most of the lenders will offer fixed rate of interest with a reset clause of 2-5 years which means that your fixed interest rate will be reviewed every 2-5 years and can be increased or decreased as per the terms and conditions mentioned in the agreement.

Repayment

Most lenders offers maximum tenure of 15 years but it is also restricted by the borrower’s age at the end of the tenure so as to ensure that the loan repayment ends on or before the retirement age of the borrower which is usually 60 years for salaried and 65 years for self-employed borrowers.

Fees and Charges

The processing fee for Loan against Property may vary from lender to lender but is usually up to 2% (excluding service tax) of loan amount.

The loan can be foreclosed any time on the payment of applicable penalty, however if the loan is taken on floating rate from the BANK then the borrower need not have to pay any foreclosure charges as the RBI has issued notification banning penalty of prepayment of all floating rate loans.

Documentation

To start the loan process, the lender will require proof of:-

· Identity

· Age

· Residence

· Income

· Property Documents including Title Deeds, chain of documents (if resale) and no-encumbrance certificate

One thing that needs to be noted is that if you are planning to buy a residential property, then it is advisable to take a Home Loan as they are cheaper, available for a longer tenure up to 30 years and lenders finance up to 90% of agreement value of the property as home loan as compared to Loan Against Property..

In case you are unable to get home loan due to any reason then you can take the loan against property.

[Source: http://www.apnapaisa.com/loan-against-property-overview/]

Property Loan

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs. Property Loan

4 Credit Tips for Buying a Home

1. Pay Down Debt/Rapid Re-Scoring

Some mortgage lenders have a credit doctor service, known as rapid re-scoring, available through their credit reporting company. This service allows them to run statistical credit modeling: the lender plugs in a certain credit score needed, an algorithm analyzes your complete credit portfolio and outlines what can be done to get you to that aforementioned threshold.

Oftentimes, high credit utilization (the amount of debt you are carrying versus your total available credit) is the culprit for a low score. In those instances, paying down certain credit accounts could make you more creditworthy — and mortgage eligible — within short period of time.

2. Time

If buying a house is a longer-term goal, time can be your friend. Credit history is a large component of a healthy credit score. Make your payments on time, keep the amount of debt you are carrying low and avoid late payments of any kind. These smart spending habits show that you are responsible with your obligations and will bolster your credit score eventually.

3. Quit or Resolve Disputes

In order to get a Loan against Property, you generally cannot have any accounts in dispute on your credit reports. At the same time, simply removing a dispute from your credit report can make your credit score drop. The reason? Credit scoring models generally ignore information being disputed, like an account with a late payment, which would otherwise hurt your credit score.

In order to circumvent these problems, work to resolve any disputes. (You can find more about getting errors off of your credit reports here.) You can also consider handling any issue you may have with a lender directly in lieu of filing a formal dispute with the credit bureaus. Here are some tips for negotiating with creditors.

4. Put More Money Down

Putting more money down to buy a home could put you in an entirely different mortgage category and help you bypass certain credit scoring problems.

Remember, if you have been told “no” by a bank or lender, you owe it to yourself to get a second or third opinion. What’s more, your credit score could improve from month to month, depending on what’s holding you back, so keep an eye on it in the meantime.

[Source: http://blog.credit.com/2016/03/4-credit-tips-from-a-mortgage-pro-139033/]

Loans against property: a time bomb ticking away?

In the fiscal year that ended 31 March, credit growth of India’s banking industry dropped to an 18-month low. The microfinance industry, in contrast, saw its loan book grow at the fastest pace and for a few it more than doubled. The scenario has not changed for banks in the past few months; year-on-year credit growth is now 9.8%. There are hardly any takers for loans from the corporate sector; the saving grace has been mortgages and retail loans.

At around Rs.12 trillion, the mortgage market in India is a little less than 10% of the size of its economy even as the overall bank credit market is about 50% of the nation’s gross domestic product or GDP. Indeed, the mortgage market has been growing at a fairly robust pace over the past decade but it is still small compared with other nations. For instance, the Chinese mortgage market is about 20% of its GDP; for the UK and the US, it has been 88% and 81%, respectively, while in Denmark, it is more than the GDP.

Home loans are the safest bet for Indian bankers, as they are backed by securities and the amount of loan is always less than the value of the property. In case of a default, the property can always be seized and sold to recover the money. Also, most banks and non-banks finance the first home purchase of salaried individuals; income verification for such home buyers is not difficult and affordability can be judged transparently.

Typically, around 40% of monthly income is used to service the loan in the form of equated monthly installments. However, within the home loan market, the increasing popularity of loans against property or LAP is causing some discomfort. A few analysts say that LAP is a ticking time bomb.

To be sure, Loan against Property is a secured loan. It takes a residential or a commercial property as collateral; self-employed individuals and professionals are LAP customers. Such loans are typically taken to support business in the form of expansion, diversification, consolidation or even meeting working capital needs. It is also taken for personal use like weddings, education, medical exigencies, repayment of previous loans and debt consolidation. According to rating agency Crisil Ltd, about 75% LAP customers are self-employed individuals doing business, 15% are salaried and the rest self-employed professionals.

The average LAP ticket size is higher than a home loan; its tenure is also shorter than the home loan, with the average being four to five years against 10-11 years for home loans. Typically, the interest rate for LAP is always 4-5 percentage points higher than the home loan rate. Similarly, the loan-instalment-to-income ratio is also higher for LAP—at least 50% against 40% for home loans. Finally, the loan-to-value ratio for LAP is lower—around 60% against 80% for home loans. In other words, a home buyer can get a Rs.80 lakh loan to buy a Rs.1 crore property but for LAP, a Rs.1 crore worth of property will fetch a loan of Rs.60 lakh.

[Source: http://www.livemint.com/Opinion/VbRw1lmZwZFfeZP43yCjLJ/LAP-A-TIME-BOMB-TICKING-AWAY.html]

Loan against Pr

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs. 

Investment Property Loan Types

An investment property mortgage is a loan for non-owner occupied property. There are two main classifications of investment property mortgages. These classifications include: commercial and residential. A commercial property mortgage is for a dwelling that contains 5 or more units and/or is zoned as commercial. A residential investment mortgage is for a dwelling that is one to four units and is zoned residential. Commercial and residential mortgages are two completely different loan types and have significantly different qualification standards. The following is a basic description of each mortgage type.

Residential Property Investment Loans

Residential property investment mortgages have similar qualification guidelines as standard owner-occupied mortgages. Although, they do have higher down payment and credit score requirements. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Score Requirement – The minimum credit score requirement is typically 680 or above for investment mortgages.

• Debt to Income Ratio – Typically, the debt ratio limit for an investment mortgage is 40% of the borrower’s verifiable income. Besides W2 income, the borrower’s last 2 years tax returns will be needed to calculate the income that can be used from other rental properties or other sources of income.

• Down Payment – Investment property mortgages require at least 15% down, but the down payment requirement increases with lower credit scores and the greater the number of units in the property.

• Income – Lenders typically will only use rental income if the borrower has a two-year history of owning rental properties. This is usually documented via the tax returns and schedules.

Commercial Property Investment Loans

Commercial loans typically have higher rates, greater fees, and shorter terms than residential mortgage. The two most important factors for lenders on this loan type include: a positive cash-flow for the property, and the borrower’s past commercial property management experience. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Scores Requirement – The minimum credit score requirement is typically 720 to 740 for a commercial loan.

• Down Payment – The minimum down payment for a commercial mortgage is typically 30% or greater. When refinancing, the maximum equity position is usually 70% of the appraised value of the property.

• Debt Service Coverage – This is a ratio used by lenders to calculate the property’s ability to generate cash flow. It is a calculation comparing the net operating income minus the mortgage payment and the other debt payments.

Other funding sources include: hard money lenders and private loans. Hard money loans are short-term loans from private investors. Private lenders typically use the equity position in the property as the determining factor whether they will approve and fund the loan. There are usually excessive closing costs and fees (points) charged on this type of loan. Property loan are loans that a person would receive from their family or friends. The terms may or may not be similar to hard money loans. Both hard money and private lenders typically only put a lien on the property and do not report payments on the borrower’s credit report.

Source: https://memphisbuyandhold.wordpress.com/2015/06/29/investment-property-loan-types/