If you are in urgent need of funds at a reasonable cost, no need to worry about high cost sources of funding. You have an interesting option in mortgage loan or loan against property (LAP). Remember, the home or the property you own not only gives long-term appreciation and rentals, but also allows you to leverage the property for a mortgage loan.
What Is Mortgage Loan?
A mortgage is a loan against property (LAP). This can be a residential property or commercial property. As long as there is no lien on the property and the titles and link documents are clear, the bank would be willing to offer you mortgage loan against the property.
SBI mortgage loans start from a minimum of Rs. 10 lakhs and go all the way to Rs. 5 crore, depending on the location of the property.
How much loan against property or mortgage loan can I get?
SBI offers mortgage loans with an LTV (loan to value) ratio of 65% for loan amounts up to Rs. 1 crore, and 60% for loans above Rs. 1 crore.
Benefits of Taking Mortgage Loan
There are some several advantages in taking a mortgage loan or loan against property from SBI.
- The interests charges are much lower than for personal loans. Hence mortgage loans allow you to leverage your existing assets fruitfully.
- The loan can either be processed online or it can be done through any of the branches. However, the mortgage loan account can be managed from anywhere.
- Bank like SBI offer a repayment period of up to 15 years, which is a fairly long period you get to repay the loan in full and also keeps EMI under control.
- There are no prepayment penalties for mortgage loans from SBI and the borrower has the facility to either prepay the loan in part or in full to reduce their liability
- Since this is a back-to-back secured loan, the credit score does not have too much weightage and you can get a mortgage loan even with a lower credit score.
Eligibility Criteria for Mortgage Loans
Who is eligible to get a mortgage loan? The criteria will differ based on whether you are salaried or self-employed.
Salaried Persons –
- The person must be a Resident of India and property must be located in one of the cities or locations as approved by the bank.
- The minimum eligibility age for mortgage loan is normally 25 years of age while the maximum age at which such a loan is given is 70 years.
- For salaried persons, such borrowers must be employed a private sector, public sector, or multinational organizations.
- The borrower should be able to furnish adequate proof of employment, bank cash flows as well as all relevant documents to evidence the clean ownership of the property.
Self-employed Persons –
In this case the conditions of residency in India and the age is the same. However, self-employed persons must be able to prove the vintage of the business as well as evidence revenues and profits based on documentary proofs like GST receipts, e-way bills, annual IT returns, audited copies of profit & loss account and balance sheet etc.
Documents Required for Mortgage Loan
Let us turn to documents to be furnished to the financier for a mortgage loan. Here are documents for mortgage loan for salaried person.
- Copies of the latest salary slips stamped by the HR department of the company you work for. The bank statement for the last 3 months or last 6 months must also be furnished with monthly inflows matching the payslip data.
- PAN card issued by the Income Tax Office. In the case of joint applicants, all the applicants must affix copies of their PAN card with the application.
- A separate ID proof (apart from PAN) has to be furnished. This can a government department issue photo id card like Aadhar Card, Driving License, Election Card, Passport, or any other acceptable document. PAN cannot be offered as ID proof.
- Proof of address of the residence of the borrower must also be furnished. Some banks accept the same document as proof for ID and address while some banks insist on separate documents. You can provide any of the documents like Aadhar, Driving License, election card, or passport as proof of address. Alternatively, even other proofs of address like property ownership deed, lease rental agreement, landline telephone bill, electricity bill, water bill etc are acceptable as proof of address.
- Income Tax returns for the last 3 years. Generally, borrowers have to submit Form 16 and also copies of acknowledged tax returns.
- Finally, all title documents of the property like the title deed, property tax receipts, last paid utility bills, link document, no objection certificate, proof of no lien etc must also be submitted for mortgage loans for salaried.
In the case of self-employed, most of the documents are common. Instead of salary slips, self-employed has to submit documents like audited financials, GST receipts and bank statement; apart from tax returns of the individual and the business to qualify for a mortgage loan. It is best to check with banks for a detailed list of documents.