Top Queries for Loan Against Property - Banknomics India

Loan Against Property, also referred to as a mortgage, is used by existing property owners to raise funds to buy real estate, finance an SME Organisation, or Equipments or to raise funds for any purpose while putting a lien on the property being mortgaged.

Loan against property for a purchase or a refinance is usually not a standalone transaction; there are many other things for a Person to think about. Yes loan officers can offer many programs to their clients, but it is also important for borrowers to be aware of their financial situation in a holistic manner.

To go through we are answering top Questions that a Person should keep in mind while applying for Loan Against Property:

1. How is Loan Against Property different from a Home Loan?
   A Loan against Property is a multi-purpose loan while a Home Loan, on the other hand, is taken only for the purpose of buying a residential property.
2. Do you need to specify the purpose for which you avail a Loan against Property?
   Most banks don’t require you to specify the purpose for which you take a Loan, up to a particular limit. Above that, they might require you to provide an undertaking that the loan is not for a speculative / illegal purpose.
3. What is the quantum of the loan I can get?
   For a Loan against Property, around 60-80% of the market value of the property provided as collateral depending upon the bank you opt for. Factors like your income, savings, investments, job stability, age, dependents, spouse’s financial health, and other loans in your name also play a crucial role in determining the loan amount.
4. What are the taxation rebate options?
   Unlike a Home Loan, no tax incentives are available on the EMIs in case the Loan against Property has been availed by a salaried person. A businessman however can claim tax deduction on the entire interest amount paid on the loan if he can prove that the loan funds were used to improve his business.
5. How would my property value be assessed?
   The bank shall determine the value of the property after conducting a formal valuation process.
6. How is the interest calculated?
   Interest rates are usually calculated on a monthly or daily reducing balance method, depending on the bank. You can also use Loan Interest Rates via Bank’s dedicated calculators