(1) The document discusses loans against property, where a borrower uses a property they own as collateral to secure a loan. (2) It outlines the types of borrowers eligible, required documents, purposes loans can be used for, and structuring options. (3) Key requirements for individuals include being under age 60, having minimum income, and income double the monthly payments; for businesses, a strong track record and minimum profits are required.

1. Loan Against Property

2. Agenda
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Introduction
Amounts of loan
Categories of borrowers
Documents required
Purpose of Loan
Loan structuring
Nature of borrowing
Disadvantages of a loan against property
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3. Introduction
• The term ‘loan against property’ refers to a situation in which the
borrower takes a loan from a bank or financial institution where the
security for the loan is a property that is owned by the borrower.
• The nature of the property will determine the amount of the loan
that is possible and the extent of the amount of the loan that is
actually available at a certain point of time.
• Availing of a loan against property ensures that the necessary
borrowing is completed with the security being created and that
the funds are available for the necessary use at a low interest rate.
• The interest rate is lower than other loan interest rates because the
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property element makes it a type of secured loan.

4. Amounts of the loan
• Amounts of loan vary with banks or financial institutions.
• There can also be further distinctions within a category based upon
the location of the property and the person taking the loan.
• Usually, the minimum amount of the loan against property that is
given by various banks start at Rs 1 lakh. When it comes to the
maximum amount side, there is a lower maximum limit as far as the
rural areas are concerned because the figure here is likely to be
restricted in the range of Rs 5 lakh-Rs 10 lakh. On the other
hand, the maximum amount figure when it comes to other areas
including urban areas is usually pegged at a limit of Rs 100 lakh or
Rs 1 crore. Most loansTrainings by loansBhagwat property will be
including Vidya against
available within this range.

5. Amounts of the loan
• There are also conditions with respect to the repayment of
the loan or the period for which the loan will be in existence.
• Most banks also keep an upper ceiling as far as the period for
the repayment of the loan is concerned and due to this
reason the repayment schedule for the borrower will also be
impacted.
• In most cases, the banks will not go beyond 84 equated
monthly instalments or a 7-year time period though in reality
long-term personal loans in excess of 3-5 years is difficult
because banks will not be willing to go this far as far as
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repayment of the loan is concerned.

6. Categories of borrowers
• Personal loans are available for different categories of
borrowers who are people in different walks of life. This
makes it a route that is quite easy to access and hence also
represents a way in which all categories of borrowers can take
care of their personal finances. The presence of this route
increases the choice for all categories of borrowers and hence
this has to be considered. The loan against property is
available for
– Salaried employees
– Professionals
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– Self-employed people
– Other income tax assesses

7. Categories of borrowers
• There is a minimum amount of salary that has to be earned by
those who are employed and also a minimum limit of annual
income earned by the professionals and other self-employed
people. This condition is there to ensure that the people who
can afford to repay the loans against property can only make
use of the facility.
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8. Documents required
There are several documents that are required to be
produced by the borrower for taking a loan against property.
These documents are important because they enable the
bank to understand the financial position of the borrower and
based upon the conditions that are present here the exact
amount of the loan will be available.
• For a salaried individual, there are two main documents that
are required and which will complete the entire process of the
documentation. These are:
• * Latest salary slips to knowby Vidya Bhagwat
Trainings the current earnings.
• * Form 16 for the purpose of knowing the total benefits for
the year.

9. Documents required
• When it comes to professionals and self-employed persons, there are a
whole lot of documents that will be required to ensure that the loan
against property is passed and made available. These include:
– Income tax returns for the past 3 years. This kind of long time period
documents are required to check for the consistency and stability of
the earnings.
– Latest income tax assessment order for specific loans that are slightly
larger in size.
– Last 6 months’ bank statements. These have to be from the main bank
of the borrower.
• In addition, there are some other common documents related to the
property that are also required to be produced.
– Original title deed of the property that is being offered for the loan
against property.
– Receipt of the latest Trainings byhave been paid like municipal
taxes that Vidya Bhagwat
tax, water tax and so on.
– Non-encumbrance letter from the society.
– Permission to create a mortgage from the society.

10. Charges
• Upfront fee
• Processing fee
• Documentation charges
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11. Purpose of loan
• There is nothing that will stop the individual from using the
money for various purposes and this includes:
– Children’s education, including higher education
– Travel purpose for self and family
– Marriage in the family
– Emergency for medical purpose
– Business need for raising immediate funds. There is no
restriction on using the funds for the purpose of business
also like a business loan.
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12. Loan structuring
Loan structuring
–Term offering
–Overdraft method
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13. Specific conditions
There are specific conditions that have to be fulfilled by the
borrower before the loan against property is actually
sanctioned. The conditions for loan are different when it
comes to individuals and business enterprises. Hence, there
has to be adequate care to fulfil these conditions for loan in
order to be able to get the loan against property.
• For individuals
• For business enterprises
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14. For individuals
• The age of the individual has to be below 60 years.
• Minimum monthly net salary or net annual income should be
above a specified limit, usually, Rs. 10,000 and Rs. 1.2
lakh, respectively.
• Net annual income has to be double that of the total of the
equated monthly instalments for the year.
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15. For business enterprises
• Should have developed a strong track record of operations
and performance.
• 3 years of cash profits.
• Net profits in the immediately preceding financial year.
• Minimum net annual income/profit of specific
amounts, usually Rs 1.2 lakh.
• Net income/profit to be 1.5 times the value of the total
equated monthly instalments to be paid in the year.
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16. Nature of borrowing
• Loan against property can be a boon for the people who have an
asset with them but do not have the necessary amount of funds
that can be used for their specific requirements.
• In such a condition, a loan against property can help them borrow
funds and then use this amount for the required purposes. If the
individual goes and borrows money from an unsecured source like a
personal loan or on a credit card, then the borrowing will be costly
for him/her. This is because a low interest rate is not possible in
these borrowings that cost much higher than several other
options, including loan against property.
• This will push up the cost of the borrowing for the individual and
will also restrict the amount thatVidya Bhagwatborrow and it might
Trainings by he/she can
leave the original objective of getting a loan at low interest rate
unachieved.

17. Nature of borrowing
• This might also give rise to a position where the borrower comes
under a large amount of strain in the process of repaying back the
amount that has been borrowed from these sources at an
exorbitant rate of interest.
• In case of a loan against property there is an asset available with
the individual in the nature of a property which can be put to better
use. Instead of borrowing from an unsecured source the individual
would do well to take a loan against property.
• This will ensure that the property is taken as a security and then the
bank gives a loan against this. The presence of the security will
reduce the rate of interest that is charged on the loan and various
other conditions will also be less strict, so this will ensure that the
borrowing is possible and that too at an affordable rate. This also
changes the nature of Trainings by Vidya because it is against a secured
the borrowing Bhagwat
asset and hence becomes a secured loan.

18. Disadvantages of a loan against property
• No scope for mistakes
• Loss of ownership
• Higher amount
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19. Assignments
1. What are the advantages of taking loan against property?
2. What documents are required by an individual and by a
business enterprise to take loan against property?
3. Compare and contrast overdraft method and term offering
method. Which one is more beneficial?
4. Compare the charges charged by at least 3 banks for loan
against property. Trainings by Vidya Bhagwat

20. Trainings by Vidya Bhagwat