How can a businessman apply for a loan against property?

Mortgage loans are secured loans offered by banks and financial institutions using one or more properties owned by the borrower as collateral. A borrower can avail these mortgage loans against commercial and residential properties. The loan is available to both salaried and self-employed borrowers to help them fulfill their business and personal needs. A businessman can also easily apply for a mortgage loan provided that he has a security or collateral to pledge. He is required to follow the below-mentioned steps to get a hassle-free, lowest cost, and most transparent property loan.

Step 1: Check eligibility and calculate EMI: A businessman should first estimate his loan amount eligibility to know the loan amount he will be eligible for and can apply for. The loan eligibility is based on several factors such as age, net income, existing obligations, property type, LTV ratio, etc. Also, he should calculate the EMI that he can comfortably service based on his income and other factors.

Step 2: Check property approval status and legal documents: The property against which the loan is to be taken should have a clean title, all statutory and government approvals as well as property documents. Some of the property documents that are required to be submitted by a businessman include: Registered Sale Deed/ Conveyance/ Lease Deed, Past Sale Deeds Chain (each transaction in respect of this property since the first allotment), latest House Tax Return/ Receipt, approved building plan from Municipal Corporation etc. Also, loans against residential properties are available at a lower rate of interest and should be the first choice of property for this loan option.

Step 3: Compare interest rates and offers: Once the borrower has checked his eligibility and the property he can borrow against, he can proceed to check the various mortgage loan offers and interest rates of different banks for different products. He can choose the one meeting all his requirements. Plus, he can also check for overdraft facility before applying for the loan.

Step 4: Compare other charges and loan parameters:Banks also charge other additional fees on property loan in addition to LAP interest rates, so a businessman should know all the additional fees and charges with a loan against property which include prepayment charges, processing fee, insurance premium and other charges applied by the shortlisted banks.

Step 5 : Select the bank based on other service related parameters:A businessmanshould also look for other services and transparency related parameters of the chosen banks. Some of these factors are turnaround time offered by the banks, quick loan delivery, doorstep services, transparency in the loan process. He also needs to understand the trends and changes in MCLR rates over a period of time. Last but not the least, he should read reviews of existing customers on websites, about interest rates and transparency to make a firm decision of borrowing loan from a bank.

After shortlisting the bank, the following steps are required to complete the loan process and get a loan sanction.

• Visit the official website of the bank or one of the online loans marketplaces
• Apply for the mortgage loan. Fill in the personal, financial and employment details.
•  Submit the required documents to the bank. Post this, the bank’s representative will call for the verification of property. Once verified,  the bank will send a sanction letter mentioning the details of the loan.
• The sanctioned amount will be credited to the borrower’s bank account. Once done, the borrower needs to hand over the original property documents to the bank.

Conclusion: So, if a businessman is planning to take a mortgage loan, he is required to have all the required documents in hand along with a good credit score for easy and hassle-free approval of the loan.

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