Our property loans & Others Services
Home Loan
Home loan, as the name suggests is a loan taken for buying or construction of home / residence. Apart from this, home loan is also taken to buy land and construct a house on it or to renovate or repair an existing property. Home loan, thus, helps in realization of dream of owning a home even if a person / family do not have ready cash to pay it all up front. There are certain lending norms for availing a home loan and these vary slightly from one lender to another. Banks usually lend between 75-80% of the value stipulated in the agreement and the rest amount is borne by the buyer (borrower). The valuation of the property is carried out by the bank and in cases and is usually come out to be lower than borrower’s expectations. The lending rate varies from one lending institution to another and also depends on how the economy and real estate sector is performing.
Home Loan can be classified as:
• Ready House/Flat purchase – A simple home loan that enables you to purchase
a new residential property (house / villa / flat).
• Land purchase and construction – For the purchase of approved plot and
residential construction on it.
• Land purchase – A loan for the purchase of approved land. Different lenders
may have different criteria for approval.
• House construction – This type of loan is only for the residential construction on
self-owned and approved residential land.
• House improvement – This is for the renovation of house to get the desired look
and comfort.
• House extension – This loan is for structural enhancement to strengthen the
present building and improving the spaces.
• Balance transfer – This loan is to get a better offer, that is, reduced ROI on
existing home loan by taking it over from the current financial institution to
another.
• Seller balance transfer – This loan is beneficial for the buyer if there is a
running home loan on the seller property. Buyer can avail a home loan on the
purchased property and the amount will be directly given into the seller
account.
• Top up – One can get enhanced amount from the existing lender on the running
home loan.
• Pre-approved home loan – One can get the loan approved prior to finalizing the
property to know his / her maximum loan eligibility.
Loan Against Property
Loan against property is exactly what the name implies. It is loan granted against the mortgage of property. The loan amount ranges from 40% to 60% of the valuation amount. Loan against property is a secured loan as the borrower guarantees that default, if any, can be compensated by his property. The loan tenure can be up to 15 years and the interest ranges between 12% to 15%.
Loan against property can be taken for various reasons: • Working capital requirements
• Purchase of machinery
• Purchase of commercial property
• Closure of existing high-cost debts
• Buying a new property
• Education of children
• Wedding
• In debt consolidation
• Any other personal, professional need
• LAP is a better option compared to personal loan as the rate of interest
is lesser in case of LAP (being a secured loan).
Commercial Purchase
This type of loan is sought for acquiring commercial premise for business or for investment motive and can involve the purchase of commercial premise (office / shop) or land and / or industrial premise (office / shop) or land. Just like home loans, lenders are actively involved in offering loans related to commercial purchase. Barring commercial land, the office space and shop can be either under construction or complete (ready to use). Unlike home loans, lenders are not very keen on funding commercial property. Some lenders do not provide CPL whereas others adopt a very cautious approach to it and this is probably because we see a lot of inventory (in some malls etc. that are not very popular) lying vacant / unused. It is suggested that when going for a CPL,
• Always opt for a property that ranks well with the lenders and carries all
the legal approvals from designated authorities.
• Have a vision and be able to foresee that the commercial asset should net
become a liability eventually (for which there can be various reasons
ranging from poor location, layout, floor etc.).
• Always go for the builders with proven track record. The risk is mitigated.
• In case of planning a purchase for land or shop / office, understand how the
schemes / plans of Government or other stakeholders like various associations (jewellers, textile etc.) may impact the value of asset in
question.
• Avoid property (office / shop) that is too old. It will be undervalued by the
lender.
Lease Rental Discounting
LRD is one of the loan schemes offered by banks under which an applicant obtains loan against his/her leased or rental property. Under LRD, the borrower pledges the future rental earnings from the leased property to the bank (for loan repayment). LRD is typically offered against commercial properties. LRD is particularly beneficial for the builders / developers who make a huge investment raising a commercial property for rent / lease purposes. The investments of the builders are in a way locked as the returns are obtained only in the form of rentals. Thus, they opt for LRD from banks by pledging their future rentals from the property. Lenders also ensure that the future rental earnings from the property are secured before offering LRD. To avail this loan, the property should be occupied by the Lessee as in Loan against Property.
Personal loans
LRD is one of the loan schemes offered by banks under which an applicant obtains loan against his/her leased or rental property. Under LRD, the borrower pledges the future rental earnings from the leased property to the bank (for loan repayment). LRD is typically offered against commercial properties. LRD is particularly beneficial for the builders / developers who make a huge investment raising a commercial property for rent / lease purposes. The investments of the builders are in a way locked as the returns are obtained only in the form of rentals. Thus, they opt for LRD from banks by pledging their future rentals from the property. Lenders also ensure that the future rental earnings from the property are secured before offering LRD. To avail this loan, the property should be occupied by the Lessee as in Loan against Property.