Looking to expand your business, but lack of funds keeping you from doing so? Are your savings and the help that friends are family are willing to extend simply not enough to help you give wings to your ideas? Well, the best idea, in this case, is to avail of a property loan. A loan against property is a secured loan under which an applicant borrows funds by mortgaging his/her property.
Here, the property serves as collateral and against it, the loan amount is approved. A borrower can use their residential, commercial, or immovable property as security for such loans. Unlike home loans, the funds availed of under LAP can be used to meet personal and business requirements; there are no restrictions as to how and where the amount should be spent.
However, one must be sure before applying for such loans as they may impact a borrower’s financial future. A borrower can use a loan against property EMI calculator to know in advance how such a loan will affect their finances.
Loan Against Property EMI Calculator
A Loan Against Property EMI calculator is an online tool that helps to calculate the monthly EMI to be paid towards the loan amount by a borrower. The calculator provides accurate results based on details, such as loan amount, interest rate, and loan tenor. Thus, a loan against property EMI calculator provides a clearer picture of how their finances will be impacted if the borrower avails of a loan against property.
Loan Against Property Interest Rates
The loan against property interest rates vary somewhere between 8.15% to 11.80% p.a. Having good terms with the lender and a good payment track record can also make you credible for attractive loan interest rates.
Loan Against Property Eligibility Criteria
Credit Score
The credit score or CIBIL score shows the credit history of the borrower. The credibility of a borrower depends on this score and shows their loan repayment pattern. A CIBIL score above 750 is thus a must to be eligible for a loan against property.
Employment Status
Employment status and job stability of a borrower, whether salaried or self-employed, is an important factor that affects a borrower’s loan eligibility criteria. Job experience of 3 years in a private/public sector firm for salaried borrowers and more than 5 years of business experience for self-employed borrowers needs to be shown with a steady income for easy loan repayment.
Source of Income
A stable and sufficient source of income is a must for a lender to sanction an application for a loan. Therefore, lenders require that an applicant must have a steady source of income. Further, if the loan EMI exceeds 60% of the monthly income of the borrower, the application is rejected. Proper and regular filing of ITR also enhances one’s loan against property eligibility.
Age of the Applicant
The applicant’s age is another factor that makes them eligible for the loan. The lender here checks whether the applicant will be able to complete the repayment of the loan before he/she reaches the age of retirement. Salaried applicants’ age must lie between 23 years and 62** years and a self-employed applicant’s age should be between 25 years and 70** years
** The maximum age must be the age at the time of loan maturity.
Property Documents
Another important eligibility criterion for such loans is that the property and documents used as collateral are verified and free from any legal issues. All property papers are first thoroughly checked by the lender to avoid any hassles in the future. property documents, such as title deeds, approvals from relevant authorities, building plans, and other documents are properly scanned and verified before sanctioning of the loan.
Loan Tenor
Shorter tenor loans are preferred by the lenders as they are low risk, although they may result in higher EMIs. Applicants seeking higher loan value for a longer tenor may be considered high risk and therefore, lenders charge high interest on such loans.
Thus, the loan tenor is an important eligibility criterion for property loans and a loan against property EMI calculator can help you calculate the best loan tenor for a comfortable EMI payment journey and eligibility.
Property Insurance
The property against which the loan is applied must be insured. An insured property instils a sense of security in the lender and increases the property loan eligibility for the borrower.
Loan Against Property Documents
These are the documents you will be required to submit if you wish to avail of a loan against property.
- Proof of identity – Aadhaar card/PAN card/Passport/Voter’s ID/Driving license
- Proof of Address of the applicant – Electricity bills, Phone bills, etc.
- Last 3 months’ pay slip of the applicant
- Last 6 months’ bank statement
- Income Tax Returns proof
- Property Documents – Agreement/title deed of the property/tax receipts, etc.
** Please note additional documents may be required while processing the loan. Representatives from the bank will communicate with you in case of such a requirement.
Tax Benefit on Loan Against Property
You may also become eligible for tax benefits on Loan Against Property under the following sections and scenarios:
Section 24 (B)
Salaried individuals can avail of loan against property tax benefits under this section if they have availed of the loan against property amount to fund their new residential house. In this case, they are eligible for tax deductions up to Rs.2 lakh. The tax deduction is applicable on interest payments.
Section 37 (1)
Tax deductions under Section 37(1) are applicable if the loan amount is used for business purposes. A borrower can claim tax benefits on interest charges, processing fees, as well as documentation fees that they would incur as a business expenditure.
No tax exemptions are allowed in case your loan amount is used for education, marriage, travel or paying medical bills.
Summing Up
A loan against property EMI calculator can help you understand and plan your loan well in advance and keep you from facing any financial hassles in the future. In simpler words, an EMI calculator provides a better picture of the whole financial situation. It helps with speedy and accurate calculations, in planning your finances and provides an easy comparison between different loan amounts, tenors, and interest rates.
