All Purpose Loan - Loan Against Property

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All Purpose Loan - Loan against Property
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Loan against property is an all purpose loan. A
loan can be taken for any purpose in the time of
financial emergency. There is personal loan but
it is tagged with a high interest rate along with
short loan repayment tenure. Therefore many
people are not able to take personal loan. If you
own a house you can take loan against and it
turns out to be cheaper than a personal loan. The
reason behind this is the lender has the
mortgaged property as security with it therefore
there is no tension of defaulter of loan amount.
While in the personal loan there are no such
security norms.
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• The loan against property has a long repayment
  period, generally 10 years. The loan can be taken
  for any financial requirement whether it is for
  funding of the existing business in case of debt
  consolidation, any emergency, education, marriage
  or other constraints. In case of personal loan
  you have to specify the reason for taking loan
  but in this loan there is no such rule but if
  your loan amount is Rs 25.00 lacs and above then
  you have to specify the purpose of the loan.

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• For instance the country's largest public sector
  bank SBI has a clause that the loan can be taken
  for any purpose what so ever. In case the amount
  of loan against property is Rs 25.00 lacs and
  above then purpose of loan will have to be
  specified along with an undertaking that loan
  will not be used for any provisional purpose
  whatever including speculation on real estate and
  equity shares.

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• Some of the banks give the loan against both
  types of properties whether residential or
  commercial but some of them give loan against
  only the residential property. The loan amount
  can range from Rs 10 lakhs to Rs 3 crores, though
  the amount varies from lender to lender.
• Some of the banks offer special schemes along
  with this loan like free personal accident
  insurance cover.
• To get this loan you must be above 21 years of
  age and the maximum is 60 years, whether salaried
  of self-employed. For instance the largest public
  sector bank the State Bank of India has the
  following eligibility criteria - an individual
  who is an employee or a professional,
  self-employed or an income tax assessed or
  engaged in agricultural and allied activities.
  Bank has fixed the maximum age limit to 60 years.

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• Though, some banks have fixed the maximum age
  limit for self-employed individuals to 65 years.
  The salaried applicants should be employed
  continuously for at least three years.

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Documentation

• Documents required for applying for loan are
• Proof of identity (passport, driving license
  etc).
• Proof of residence address (passport, electricity
  bill etc), and proof of age (birth certificate,
  school leaving certificate, passport etc).
• Salaried individuals must submit their latest
  acknowledged IT returns or bank statements for
  the last three months.
• Self-employed individuals can submit computation
  of income for the last two years certified by a
  charted accountant.
• In this loan there is a facility of an overdraft.
  Some banks offer this facility. The big advantage
  of taking this loan using the overdraft option is
  that the borrower has to pay the interest only on
  the money withdrawn, till the time loan is repaid.

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• While in the normal course the interest is paid
  on the entire amount throughout the tenure of the
  loan.
• Before finalizing a bank check for the fees and
  penalties. Banks charge processing fees - is the
  amount charged by banks to cover the cost of
  processing your loan. The amount range varies
  from bank to bank. The fee amount is generally
  between 0.25 to 2. The foreclosing of the loan
  before the actual tenure carries prepayment
  penalty.
• Some banks charge this as a percentage of the
  outstanding principal of the loan amount.
  Therefore study all the features and terms and
  conditions carefully.

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