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30 Jun
  • Editorial Team
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When it comes to taking a loan, what does one ideally look for? Is it a higher amount, a lower rate of interest or speedy quick processing or easy documentation? If you are considering any of these items before taking your next loan, then you must consider mortgage loans as an option. As the name suggests, a mortgage loan is taken against a property or real estate asset. It's a highly popular loan type offering the all benefits listed above.

So how does a Mortgage Loan or Loan Against Property offer all of these benefits? This is because the bank or financial institution in question considers real estate to be a highly secure asset class; and the secure nature of the underlying asset allows them to create an all-encompassing product.

Benefits of a Mortgage Loan or Loan Against Property
Attractive Interest Rate: As the loan is taken keeping the property as collateral, the rate of interest is generally lower when compared to other loans.

Low Processing Fee: Lenders generally do not charge or barely charge about 1% of processing fee.

Flexible Tenure: These loans are generally available for longer tenure going up to 15 years

Quick & Hassle-Free Processing

Lower EMI

High Loan Amount

Tax Savings (for Businesses & Self-Employed Professionals): They reduce the amount of tax to be paid to the government. The money you pay as interest may be excluded from the tax.

Multiple Property Types Accepted: (Commercial, Residential, and Alternate Assets - Farm Houses, Industrial Setup, Vacant Land or Plot, School, College, Hospital, etc.)

Uses for a Mortgage Loan or Loan Against Property:
Business Growth or Expansion: Not everyone has sufficient income or funds at hand for business expansion. A Mortgage Loan / Loan Against Property can be a great option to monetize and retain your property or real estate assets.

Plant or Machinery Purchase: For this purpose, people usually employ cash reserves and profits made by their business or organization. However, during times of low cash flow or weak cash position, one could turn towards a Mortgage Loan / Loan Against Property.

Acquisition or Project Financing: Such loans are a great way to fund a business critical acquisition or finance a new project. The relatively lower interest rates and EMI payments along with a higher loan amount make Mortgage Loan / Loan Against Property an ideal source of funding.

Eligibility & Documentation


These elements usually vary from one bank/financial organization to another, however, the most commonly accepted requirements are:

Your income, savings & debt commitments: To make sure that you'll be able to repay the loan on time.

Cost / value of the mortgaged property: To commit a certain loan amount against your property. The loan amount is usually around 60%-80% of the property value.

Your repayment track record for other loans, credit cards: This is for calculating your credit score, which has a huge significance attached to it.

 Documents vary, based on source of income such as:
For Salaried Individuals:

Form-16 issued by current employer

Last 3 months salary slips

Salary account bank statements (past 6 months)

Identity & address proofs

Property papers (complete ownership chain)

For Self-employed Business Owners:

Identity & address proofs

Property papers (complete ownership chain)

Bank statements (past 6 months)

Educational qualification certificates

IT Returns for the past 3 years

For Self-employed Professionals:

Identity & address proofs

Property papers (complete ownership chain)

Certificates that prove your academic qualifications/credentials.

All registration/licensing certificate pertaining to your profession.

Business existence proof/business profile details.

Previous 3 year's balance sheets as well as P&L Statement of the company.

Acknowledged Income Tax statements of the company and self for previous 3 years.

Bank statements (past 6 months)

A Mortgage Loan / Loan Against Property is one of the best type of loan, it can help turn your dreams into reality. To know more about them read some of our earlier blogs linked below:

Loans against property - a ready guide

Loan against property vs. Personal loan

Why is loan against property the preferred choice of businesses?

Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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