Things you need to Know about Mortgage Loans and Loans Against Property (LAP).
Let’s understand mortgage first:
A mortgage is a type of loan used to finance the purchase of real estate or other types of property. Typically, the collateral for the loan is the property being purchased, which means that if the borrower is unable to repay the loan, the lender may seize the property and sell it to recoup the remaining balance owed.
In a mortgage loan, the borrower (also known as the mortgagor) pays the lender regularly over a predetermined time, usually 15 to 30 years. Principal (the amount borrowed) and interest (the cost of borrowing the money) are both included in these payments. The size of the loan, the home loan interest rates, and the length of the loan term all affect how much will be paid each month.
Learn everything about mortgage loans and loans against property. Learn about how to get, eligibility, processing costs, needed paperwork, security, etc.
You must be seeking the answers to the question related to mortgage loans and loans against property, right? With this list of things, you will come to know about everything related to mortgage loans and loans against property.
Based on their source of income, property information, and other investments and collateral, salaried as well as self-employed persons can easily apply for mortgage loans or home loans thanks to a variety of eligibility and availability criteria.
Let’s roll over some important points you should be aware of before requesting these types of loans.
About eligibility:
What are the general criteria used to evaluate your eligibility for a mortgage loan?
A mortgage loan and a loan secured by property have similar qualifying requirements such as:
- Income
- Age
- Property Valuation
- Existing Liabilities (if any)
- Current Work Experience
- Financial Documents
What loan amount will get sanctioned to you?
Depending on your bank’s policy, the type of property, and the appraisal, you may be eligible for a LAP sum of up to 80% of the market value of your home. The best LAP interest rates are available from HDFC.
Will this LAP charge a high-interest rate?
No, not at all. Because the property is used as collateral, interest rates on mortgage loans and loans secured by property are typically lower than those on unsecured loans.
How will the Bank determine my property’s current market value?
The bank would undertake an evaluation to ascertain the property’s value.
What steps my loan application must go through?
- Application
- Documentation and Processing
- Underwriting Verification, Personal discussion/evaluation
- Loan Sanction and Disbursement
Does the Bank impose any processing fees?
Yes, you can look at your bank’s page’s fees area. It’s a good idea to keep in mind that the processing fee charged by HDFC Bank, which is deducted now your loan agreement is executed, can be up to 3% of the total amount of your loan.
What documentation is required to apply for a LAP?
See, rules for salaried and non-salaried individuals vary. Let’s go through it separately:
For salaried individuals:
- Application form with photograph
- Identity and Address Proof
- Latest Salary Slips
- Form 16
- Bank Statements (Last 6 months)
- Processing fee cheque
For non-salaried individuals:
- Application form with photograph
- Identity and Address Proof
- Proof of business existence & Education Qualifications.
- Last 3 years ITR
- Last 3 years P&L and Balance Sheet
- Bank Statements (Last 6 months)
- Processing fee cheque
Do I require a co-applicant when I apply for a loan?
Yes. You will need to register as a co-applicant on behalf of each co-owner of your property. One adult family member must register as a co-application for a solitary property owner or applicant. Partner directors and promoter directors, respectively, must be co-applicants in the case of a partnership firm or a company.
How long does it take the Bank to disburse a loan?
If all the bank’s eligibility requirements are met and all required documents are submitted on schedule, your loan will be disbursed in 10 to 15 working days.
Does property insurance is required?
Yes, during the term of the loan, the property must be insured against fire, flood, earthquakes, and other hazards.
Now better understand re-payment, and pre-payment better:
How can I pay back my loan?
EMI payments (Equated Monthly Instalments) are used for the LAP repayment process. These can be paid for using the customary Post-Dated Cheques (PDC) or the Electronic Clearance System (ECS).
Can I pay off my debt early?
You have the option to prepay both the pre-payment fees and your loan against the property. Typically, the bank will charge 3% of the pre-paid principal.
What kind of security or collateral must I offer to be eligible for a loan against property?
Any residential or commercial property that you want to mortgage with a bank and that has received the appropriate legal and technical approval from government agencies may be used as collateral for a loan against property (LAP).
Can my spouse and I apply jointly? Will the loan amount be determined by considering both of our salaries?
Yes! For calculating the loan amount, your salaries may be combined. This is possible when your spouse and you jointly own the property when your spouse acts as a guarantor or your co-applicant, or both.
What does the chain of agreements in loans against property mean?
Chain Agreements are records that trace the ownership of the property from the builder or owner who initially purchased it to the current owner. You must provide the Bank with a chain of agreements for a technical review and thorough valuation of your property as part of the LAP availability procedure.
What is an equitable mortgage in Loan Against Property?
Transferring a property interest to a lender as collateral for a loan of money is known as an equitable mortgage. This is processed with the understanding that the owner will receive their interest back after the mortgage’s conditions have been met or fulfilled. By submitting the property’s title deeds to the lender, the Bank disburses this loan.
What is a registered mortgage in Loan Against Property?
In this situation, a charge is made against your property in official records, and it is registered with a sub-registrar.
What is a balance transfer on a loan against property?
You can move all your current Loan Against Property agreements (LAP deeds) from your current banker to a new one via a Loan Against Property Balance move, or LAP BT. Either to negotiate a lower interest rate or if you are having service problems with the bank, this is done. At HDFC Bank, we are firm believers in openness and truthfulness. Not to mention the top-notch LAP interest rates and service!
