Getting Loan Against Home in India or the mortgage of home
Loan against home connotes a loan that is given or disbursed against the mortgage of home, as a certain percentage of market value of the property. Generally, the loan amount that is sanctioned ranges from 40% to 70% of the market value, with a minimum threshold limit of Rs 2 lakh. A loan against home works out to be much cheaper than personal loan. The rate is lower because the lending entity has a security in the form of the housing mortgage vis-à-vis a personal loan that is given without any security.
The tenure for repaying loan against home has an upper limit of 10 years. The loan can be taken for any purpose and the customer is not required to disclose the motive behind the loan, to the lending authority. The criteria for loan against home are same as that of a home loan. Part prepayment as well as full prepayment of the loan is generally allowed by most lending institutions, though with a charge. Loan against property is available in case of both residential and commercial property. Many housing finance companies allow individuals to take loan against home even if they have taken a housing loan from them.
Amount Of Loan Depends Upon
Your income, savings, debt obligations
Cost/value of the property mortgaged
Your repayment track record for other loans, credit cards, etc
Number of years in service/ business
Eligibility Criteria
Salaried Individuals
Minimum Age of Applicant: 21 years
Maximum Age of Applicant at the Time of Loan Maturity: 60 years
Minimum Net Monthly Income: Rs 12,000 per month
Self-employed Individuals
Minimum Age of Applicant: 21 years
Maximum Age of applicant at the Time of Loan Maturity: 65 years
Minimum Annual Income: Rs 1,50,000 per year
Documents Required
Proof of Residence (Copy of Ration Card/ Telephone Bill/ Electricity Bill/ Voters Card)
Proof of Identity – (Copy of Voters Card/ Drivers License/ Employers Card)
Bank Statement / Passbook, for past 6 months (where salary/ income is credited)
Salary Slip for last 3 months, with all deductions
Form 16 for the last 2 years
Copy of all Property Documents
In case of self employed professionals, apart from the above documents, certified financial statement for last 2 years is required
Two passport size photographs
Other Details
Generally, loan processing charge of 2% is levied.
Pre-payment is allowed after 6 months. Generally, prepayment charge equivalent to 4% of the outstanding principal is levied.
In most of the cases, the minimum amount of loan against property is Rs 25,000 and the maximum amount is Rs 1.5 crore (Rs 15 million).
The charges that might apply in case of loan against property are processing fee, pre-payment fee, charges for changing from fixed to floating rate of interest and charges for changing from floating to fixed rate of interest.
Business loans to self employed professionals, firms and corporations
Business loans are available to self employed professionals, firms and corporations, to meet their operating expenses, finance capital expenditure (or acquisition of fixed assets) towards starting or expanding a business. Even industrial units are given business loans, to swap existing high-cost debt from other bank / financial institution. Apart from providing funding, bank can also issue letters of credit or give a guarantee, on behalf of the customer, to the suppliers and even government departments, for the procurement of goods and services on credit.
The maximum amount of business loan that can be sanctioned varies from bank to bank. However, the minimum loan amount is Rs. 25000 and maximum loan tenure is 5 years. Generally, no security is required for business credit up to a certain limit. For business loans above the limit, banks usually require a collateral security or a percentage of business loans as margin, in the form of fixed deposit with the bank. Business loans are similar to an overdraft and are available like a limit on current account. In this case, the interest is charged only on the actual amount utilized, rather the entire amount of loan.
Types of Business Loans
Professional Loans
Professional loans, as their very name suggests, are provided to self employed professionals like Doctor, Chartered Accountant, Interior Decorator, Architect, Company Secretary, etc. Unsecured in nature, this type of loan is not given to manufacturing, trading or processing units. The amount of loan varies between Rs. 25000 to Rs. 25 lakh, considering the age of the applicant, his financial standing, his repayment capacity, tenure of the loan (maximum 5 years), etc.
In case of professional loans, the rate of interest depends upon the prime lending rate, is calculated on diminishing balance and can be on the fixed as well as fluctuating basis. In many cases, it depends upon the customer’s profile and his financial capacity. The payment is made through EMIs and in only a few cases, tangible collateral security is required. Most of the finance companies also charge a process fee, usually 1% of the loan amount.
Documents Required
Proof of Identity (Passport Copy/ Voters ID Card/ Driving License)
Address Proof (Ration Card/ Telephone Bill/ /Electricity Bill/ Passport)
Bank Statements (latest 6 months bank statement /passbook)
Latest ITR, along with computation of income
Balance Sheet & P&L Account for the last 2 yrs, certified by a CA
Qualification Proof of the Highest Professional Degree
Proof of Continuation (Trade license /Establishment /Sales Tax Certificate)
Other Mandatory Documents (Sole Proprietorship – Declaration, Partnership – Copy of Partnership Deed, Apart from Copy of MOA, AOA & Board Resolution)
Two passport size photographs
Trade Loans
Trade loans are provided to traders/ businessmen, so as to help them either open a new business or operate/expand an existing one. The amount of loan varies between Rs. 25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his repayment capacity, tenure of the loan, etc. The maximum duration for which the loan is given is 5 years and it has to be repaid through Equated Monthly Installments or EMI.
The rate of interest depends upon the prime lending rate and can be offered on the fixed as well as fluctuating basis. There are many banks that require customers to furnish collateral security for the loan, in the form of mortgage of land (not agricultural land) and building. Apart from that, National Savings Certificates, Government Bonds, Bank’s Term Deposits, Assignment of Life Insurance Policies, Approved Shares & Bonds (in the name of borrower/proprietor/partner/director) are also acceptable.
Type of Concerns Given Business Loan
Sole Proprietorships
Partnerships
Private Limited Companies
Documents Required
Sole Proprietorship / Partnership Firm
Proof of Identity (Copy of Sales Tax / VAT /Service Tax / Excise Registration Receipt OR Registration under Shops and Establishment Act OR PAN ID / IT Return of the Concern OR Water / Electricity / Municipal Tax Bill in the Name of the Concern OR MAPIN Card in the Name of the Concern)
Proof of Individual Identity (Copy of Passport/Voter’s Identity Card/Photo PAN Card/Driving License/MAPIN Card)
Proof of Residence Address (Copy of Passport/Voter’s Identity Card/Driving License/Ration Card/Life Insurance Policy/Electricity Bill/Telephone Bill)
PAN Number/Form 60 of the Concern
Financial Documents (Copy of P & L Account and Balance Sheet for last two years, audited by a CA and Copies of IT returns for the last two years)
Bank Statements for last 6 months
Partnership Deed (Required only in case of Partnership Firm)
Proof of Place of Business
Two passport size photographs
Private Limited Company
Proof of Identity (Copy of Sales Tax / VAT /Service Tax / Excise Registration OR Registration under Shops and Establishment Act OR PAN ID / IT Return of the Concern OR Water / Electricity / Municipal Tax Bill in the Name of the Concern OR MAPIN Card in the Name of the Concern)
Memorandum and Articles of Association (Copy of Certificate of Incorporation)
Board Resolution (Copy of Annual Return establishing the shareholding pattern)
Proof of Individual Identity for the authorized signatories and 2 directors, including the managing director (Copy of Passport/Voter’s Identity Card/Photo PAN Card/Driving License/MAPIN Card)
List of Directors
Copy of Form 32 filed with ROC
PAN Card / Form 60 of the Concern
Financial Documents (Copy of P & L and Balance Sheet for last two years, audited by a CA, and Copies of IT returns for the last two years)
Bank Statements for last 6 months
Proof of Place of Business
Two passport size photographs
More Information
Short-term Loans
Used for short-term working capital requirements and paid within 1 year.
Intermediate Loans
Used for new business, to build inventory, buy equipment or increase working capital, and paid between 1 and 3 years.
Long-term Loans
Used for well established business, to increase fixed assets, for related business acquisitions or expansion, and paid between 3 and 5 years. At times, used for start-up business, to purchase land or buildings, fund construction efforts or finance long-term working capital.
Note
Two types of charges might be levied in case of business loan – processing fee and Pre-payment fee. Processing fee is payable at the time of processing of loan application. Pre-payment fee is payable in case you decide to pre-close your loan account, by paying the entire/part of the loan before it is due.
auto loan – check out the various finance schemes available
With a plethora of auto loan opportunities available in India these days, it is now possible for you to buy your dream car within a matter of days. No need to save up money for making complete down payment at the time of buying. Just gather enough amount for the initial payment and pay the rest in easy installments, by taking up a loan. The best part about auto financing is that, apart from the new cars, loans are available for old cars as well.
After you have decided to take an auto loan, check out the various finance schemes available in the market. After undertaking a thorough research of each and every scheme, you will need to pick the one that suits you the most, in terms of interest rate, monthly installments, duration, and so on. The size of the loan will depend upon the cost of the vehicle and its type (standard or premium), along with the percentage financing you want or are being offered.
In case of a new car, up to 90% of cost of the car is finance, while the percentage gets reduced to 80% in case of old car. However, the financiers might have different terms for different models. For example, Maruti 800 has a high resale value. In case the buyer defaults and the finance company has to sell the car, to get back their loan amount, it would be able to get a higher value. Therefore, the finance company may give higher percentage of finance in such a case.
There is no necessity for any collateral to get a car loan. Usually, the bank or finance company hypothecates the car in its name. The endorsement for hypothecation is made in the Registration Certificate (RC) book of the vehicle, which gets cancelled after the loan is repaid. Usually the tenure of auto loan varies from 1 to 5 years. However, there are some banks with schemes that offer loans for 7 years as well.
General Features
In case of a new car, loan amount is up to 90% of cost of the car.
In case of used car, loan amount is up to 80% of the car.
The maximum loan amount is up to 3 times the annual salary (for salaried professionals) or 6 times the annual income (for self employed professionals).
Banks generally offer a preferential treatment to their existing customers. If you have savings or current account with a bank, it is easier to get the loan and you might also get preference in terms of rate of interest.
Loan is given for a period of 1 to 5 years.
If you want to go for an early settlement of the loan amount, certain charges are taken as a penalty.
For the purpose of auto loan, the interest is calculated on compound basis.
There is also a minimum amount of auto loan that you have to take from finance money.
In case you have been declared bankrupt, applied for bankruptcy, defaulted in some loan in the past or a court case pending against you, it will be very difficult for you to get an auto loan.
The rate of interest for an auto loan differs from one bank to the other, while the minimum is somewhere around 10-11 percent.
Eligibility Criteria
Minimum Age of Applicant While Applying For Loan: 21 years
Maximum Age of Applicant at Loan Maturity: 58 years
Minimum Employment: 1 year in current employment and minimum 2 years of employment in general
Minimum Annual Income: Rs 100,000 (net)
Telephone: Must at Residence
Documents Required
Proof of Identity (Copy of Passport, PAN Card, Voters ID Card or Driving License)
Income Proof (Latest salary slip with form 16 – for salaried individuals or IT returns for the last two financial years – for self employed individuals and professionals)
Address Proof (Copy of Ration Card/Driving License/Voters Card/Passport /Telephone Bill/ Electricity Bill/Life Insurance Policy/ Pan Card)
Bank Statement (For the last 6 months)
Two passport size photographs