What is Mortgage Loan?
A mortgage Loan or Loan against property is a loan that you get from the Banks or NBFC against the Mortgage of your property. This type of loan comes under the category of a Secured Loan.
Loan against Property rates/Banks interest rate Comparison
| BANK | INTEREST RATE | PROCESSING FEE |
| HDFC BANK | 8.75% | 0.75% |
| AXIX BANK | 8.50% | 0.50% |
| SBI | 8.05% | 0.50% |
| PNB | 9.50% | 1.0% |
| LIC HOUSING FINANCE | 8.50% | 0.75% |
| KOTAK BANK | 9.50% | 1.0% |
| YES BANK | 8.95% | 1.0% |
| IDFC FIRST BANK | 11.0% | 1.0% |
| PUNJAB AND SIND BANK | 9.35% | 1.05 |
| BAJAJ HOME FINANCE | 9.0% | 1.0% |
| CANARA BANK | 9.95% | 1.0% |
| INDUSIND BANK | 8.65% | 2.0% |
| HSBC BANK | 9.8% | 1.0% |
| BANK OF INDIA | 8.85% | 1.05 |
| UCO BANK | 9.45% | 1.0% |
| UNITED BANK OF INDIA | 10.75% | 1.0% |
| INDIAN OVERSEAS BANK | 9.75% | 0.62% |
| CENTRAL BANK OF INDIA | 13.75% | 0.5% |
| FEDERAL BANK | 10.10% | 1% |
Eligibility for Mortgage Loan
- Age-18yrs to 70yrs
- Income- Salaried-min 10000/month,self employed-min 3 lacs per annum
- Work experience-for self employed business establishment should be of min 5 yrs with 3 yrs ITR
- Loan to value(LTV)- higher ltv is considered to be a high risk loan,bank opts for 30-40% ltv
- Cibil score-Cibil above 600 is considered good by banks
Interest rates for salaried and self employed
| Salaried | 7.2% |
| Self employed | 15% |
Benefits of Mortgage Loan
- Lower interest rate-as low as 7%
- Tenure-ranges from 15 to 20 yrs
- Tax benefit-Tax benefit on the interest paid
- Can avail 50% of the property value for lobger durations
- secured loan so easily provided by banks
Types of mortgage loan
- Regular Loan against property-Almost all banks offer loan against residential propety at interest rate of 7.0%,few banks offer loan against commercial properties
- Loan against Property overdraft– bank offer this facility to its customers who has fluctuating fund requirement throughout the year, in this facility customer can deposit the surplus capital obtained through loan for few days to a year in his property loan account and hence reduce his interest liability
Top banks offering property overdraft at lower interest rate
| BANK | INTEREST RATES |
|---|---|
| AXIS BANK | 6.6% |
| SBI | 6.8% |
| LIC HOUSING FINANCE | 6.9% |
| IDBI BANK | 6.95% |
| FEDERAL BANK | 7.65% |
Documents Required for Mortgage Loan/ Loan Against Property(LAP)
| Documents Required | Individuals | Firms, Partnerships |
|---|---|---|
| Application form | Duly Signed | Duly Signed |
| Identity Proof | PAN card, Passport, Driving License, Aadhar Card/Voter id | PAN card, Passport, Driving License, Aadhar Card/Voter card |
| Proof of Business Existence | -NA- | PAN , sales tax/ service tax registration/VAT, Copy of partnership deed, Trade license, registration certificate . |
| Address Proof | Passport, Driving License, Election ID card, Electricity/ Telephone/ Mobile bill/ bank statement (not more than 3 months old) | Bank statement, utility bill, Registry copy, lease or rent agreement, TAN allotment letter |
| Age Proof | PAN card, Passport, Driving License/Voter id card/ Birth certificate | PAN card, Passport, Driving License/Voter card/Birth certificate, Employee ID card |
| Income Proofs | For Salaried individuals-form 16, latest 6 months salary slip, last 6 months bank statement, last 2 years ITR | last 2 years ITR ,latest 6 month bank statement |
FAQ
Must read: Everything you need to know about HomeLoan
Must read: Loan against property ,whatisit and how it works
Must read: How to get personal loan approved
LAP can be used for many purposes like Expansion of existing Business, renovation of Business area or Home, consolidation of the high interest debt, it also has a lower interest rates and longer repayment tenure than the personal Loan.
Properties with existing Motgage cannot be considered for LAP, Property should not be under any legal dispute and should have a clear title.
Misconception is that only the Home or residential property is considered for LAP, on the contrary the commercial property or even the land could be taken as collateral for considering loanunder LAP.