Loan Against Property

Loan Against Property In India refers to the secured loan category where the borrower gives a guarantee by using his property as a security. The right of ownership of the property is still with the borrower, and if he/she is unable to repay the loan amount, he/she can sell the property to pay off the debts.

Typically these Bank Loan Against Property are used to start or expand business or to renovate your house. But these Bank Loan Against Property can also be used to repay existing high rate loans.

Ownership
The facility can be granted to the company / partnership / proprietorship against the security of Property held in the name of the company/firm/director / partner / proprietor/any close family member. Salient Features

Loan Amount
Minimum: Rs.2,50,000/-
Maximum: There is no upper capping

Margin

• Loan against Self Occupied Residential Property: Up to 65% of fair market value
• Loan against Vacant Residential Property: Up to 50% of fair market value
• Loan against Rented Residential Property: Up to 50% of fair market value
• Loan against Self Occupied Commercial Property: Up to 60% of fair market value.
• Loan against Rented Commercial Property: Up to 60% of fair market value
• Loan against Residential Plot: Up to 40% of fair market value
• Loan against mixed use property: Up to 55% of fair market value
• Loan against vacant Commercial Property: Up to 50% of fair market value.
• Loan against Industrial Property: Up to 60% of fair market value

Interest
Different banks offer different rates based on their PLR & the amount of loan applied for.
Rate of interest can also vary considering under what product bank is processing your case.
Loans under no income proof scheme attract 0.5 to 1% higher rate of interest then the normal rates.
At present almost all the banks are sanctioning loans in the range of 12 to 16% ROI on monthly reducing balance

Tenure
Maximum-15years for a loan amount up to 2cr.
-10 years above 2cr

LOAN REPAYMENT
Loan repayment shall normally be in Equated Monthly Installments (EMI) comprising of principal and interest over a maximum period of 15 years. The table below shows the EMI for a loan of Rs. 1, 00,000/- at different rates of interest.

Processing fees:1% of the loan amount sanctioned.+ applicable service tax

Loan Against Future Rent Receivables has been developed considering the growth potential in the real estate in various metros and urban centers, where many commercial properties/shopping malls are being developed and the owners approach banks for loans against securitization of future rent receivables from such properties.

Salient Features

Ownership
The facility can be granted to the company / partnership / proprietorship against the security of Property held in the name of the company/firm/director / partner / proprietor/any close family member.

Loan Amount
Maximum upper limit has no capping subject to 90% of NET rent receivable during the period of tenancy or 108 months whichever is lower, less any other local tax/maintenance charges to be paid by landlord/tenants, if any as per lease agreement.

However, any other advance already taken against rent receivables would also be deducted from permissible limit.

Margin
A. Loan against rented commercial property. Up to 40 to 60% of fair market value.

Interest
Different banks offer different rates based on their PLR & the amount of loan applied for.?
At present almost all the banks are sanctioning loans in the range of 12 to 13% ROI on monthly reducing balance

Repayment
By monthly Cheque/DD/Pay Order issued by the tenant/lessee in favor of owner/lessor. It is to be ensured that entire outstanding gets adjusted within the period of rent/lease agreement.

Comfort letter
The letter of comfort stating irrevocable undertaking from the tenant/ lessee that Cheque/DD of rent payable every month will be sent directly to the Bank mentioning the loan account no. of the lessor during the currency of tenancy period.

Other Condition

• There should be written and registered Rent/lease agreement between the owner and authorized official of the tenant/lessee. The agreement should specify the period of tenancy, monthly rent, advance rent payable if any and who is liable to pay maintenance charges/municipal taxes etc.
• The lease agreement should stipulate that landlord will not get the premises vacated till the liquidation of loan amount.
• There should be specific mention in the lease agreement to the effect that the landlord will not raise loan against such property from other banks without written permission from our bank.
• A tripartite agreement, as per Draft of the concerned bank, should be got executed among the concerned parties viz. the landlord on one part, the tenant on the second part and the bank on third Part along with other required documents.
• The property, being accepted as security, should not be owned by minor(s), either wholly or jointly with others.
• If rent is received from the associate/ allied concerns then such cases will not be covered under the schemer.

Processing fee
1% of the loan amount sanctioned.

Pre-payment
Almost all the banks offer the facility of prepayment of loan availed by them. For prepayment of loan amount bank charges a nominal prepayment charges on the balance principal amount on the day of prepayment which can vary between 2 to 4%(still negotiable) depending on the bank.