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Mortgage Loan on Joint Property

The property with the joint ownership of all the family members means we can say it's a HUF (Hindu undivided family). One person of the family is appointed as a "Karta" and there is no limit to the membership of family members once the family members get married but he should be the son only. If the daughter gets married than she will not be considered as the member of HUF further. Generally HUF gets some income tax benefits on their yearly income and HUF gets special benefits from government and for getting the special benefits, in the same year two ITR(Income tax returns) needs to be filled by family. One is for individual name and another Income tax return with the name of HUF, so this is the clear picture of joint family low of Hindu religion.

Now we see the overall banks stands on the joint ownership property anywhere in India from HUF ownership. HUF is created due to some large undivided family structure and in this structure some minor family members can also be there and as per the Indian company law "No contact can be done with the minor members of the family in any manners". If this happens, then it would be invalid and the transaction of property shall be cancelled. This is the only reason why banks and other financial institutes are not providing the mortgage loan, loan against property or any kinds of secured property loans against existing property which includes the ownership of HUF with presence of minor members of the family.

Sometimes, we see some kind of self employed customers who belongs from HUF and the owner of the firm is the "Karta" of the HUF in this situation. In such cases, if business stability is not a concern area which means company has enough experience approximating more than five years and have sufficient amount of ITR and supportive ABB is last one year bank statement with good vintage of existing loans in current balance sheets and P&L(Profit and Loss Statement) account of the company from last three years, some other parameters like the nature of business of the company also matters for availing unsecured loan from any of banks and financial company like NBFC and the loan amount can be availed up to 30 to 40 lacs as per the calculation from last three years ITRs.

HUF Karta can avail home loan also but the only points to be followed is, the family must not have currently any of minor members out of the HUF family, and some other point where member is director in any of Pvt Ltd entity, he is eligible to become the co-applicant, if the company is coming as applicant for any secure or unsecure loan processing. Loan against Property or any of Mortgage Loan on joint property is very difficult product due to some legal aspects which can come to HUF law, so the borrower have only few choices for getting loans. One is unsecure Personal Loan and other is Business Loan but he can avail the secured mortgage only if than he does not have any minor person in his family and it should be on board.

Source: http://www.sooperarticles.com/business-articles/financial-management-articles/mortgage-loan-joint-property-1292796.html?

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Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs.

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Personal Loan Vs Loan against Property

What is a Personal Loan?

A personal loan is a loan often extended by a bank or a financial institution to meet the financial needs such as medical expenses, wedding or vacation funding, house repairs or renovations, debt consolidation etc. The end usage of the money extended as personal loan is not monitored by the lending bank or financial institution. A personal loan is usually extended on the basis of a person’s credit history and the borrower is expected to repay the loan from personal income. Such a loan is often extended without any of the borrower’s asset being pledged as collateral.

What is Loan against Property?

As the name suggests, a loan against property (LAP) is a loan raised by mortgaging the property to a bank or a financial institution. Historically, in India loan against property signifies loan against the borrower’s real estate asset. In more recent times, however, gold (bonds and jewellery), government securities and bonds, and even equities are considered viable assets against which loans are extended. In case of LAP, the lending institution (bank) holds the asset as collateral and extends some 40 to 70 percent of its market value as loan. If the loan is made for the purchase of property, the property acquired by it is mortgaged till the loan is repaid.

Personal Loan Vs Loan Against Property

In many cases, the decision to opt for a personal loan or a loan against a property is often a personal one or may depend on factors such as availability and ease of obtaining credit etc. There are a number of similarities and important differences between the two that you must be aware of before opting for either.

In general, banks and lending institutions do not specify the end utility of the money borrowed by way of personal loans and loans against property. Only in rare cases do lending financial institutions specify the usage of a LAP. This means that in most cases, the borrower may approach a bank or lender for either LAP or personal loan with a loan requirement without the need for stipulating how the loan amount will be spent.

Apart from this, the two loans differ in many ways.

·         A personal loan is a loan that the bank or financial institution extends on the personal recognizance of the borrower after studying his/her salary or income, credit worthiness, and previous loan track record (if any). There is no need for a guarantor or a security to be able to raise the personal loan. In case of the LAP, however, your asset (usually real estate property) will be mortgaged and the loan extended against it. This means that your property could be forfeited if you fail to repay the loan.

·         A personal loan is a non-secure loan for a bank, this means that in case of a failure to repay, the bank has no collateral or guarantor who can assure repayment. This makes the process of taking out a personal loan subject to much scrutiny. Taking out an LAP, on the other hand is much easier, since the loan amount is secure. It is a mere fraction of the value of the asset mortgaged.

·         Personal loans are usually taken out on smaller amounts of loans (averaging INR 3-5 lakhs). These are loans to meet at the borrower’s emergency needs such as medical expenses or to meet needs when other loans are not available eg. wedding expenses, children’s education etc. Loan against property is usually a much larger amount in comparison to a personal loan. Most institutions lend about 40 percent to 70 percent of the value of the mortgaged property.

·         Due to the increased risks to the bank or the lending institution, interest rates on personal loans are often higher than loans against mortgage of property. LAP interest rates range from 12 percent to about 16 percent. Personal loan interest rates range from 16 percent to 21 percent.

·         The Equated Monthly Installments (EMI) on LAP is also much lower in comparison to personal loans.

·         Personal loans have a maximum repayment term of 5 years or 60 months. LAP repayment terms may extend up to 15 years.

What documents will I need for a LAP?

Most lending institutions will require the following documents before extending a LAP:

·         Application form with photograph

·         Proof of Identity

·         Proof of Residence

·         Salary slips/Proof of Business Existence

·         6 months bank statements

·         IT returns for 3 years (individual and business if self-employed)

·         Processing fee (payable by cheque)

In most cases, the choice of taking out a personal loan or a loan against property will depend on the borrower’s need, availability of property for mortgage, lending institution’s regulations, end purpose of the loan, and urgency. In both cases, it is best if the borrower approaches a nationalized bank or a bank of repute rather than depending on personal lenders of shady repute.

Source: http://www.mapsofindia.com/my-india/business/personal-loan-vs-loan-against-property

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Let your property be a shelter to your dreams. IDBI Bank Loans against Property is a multi-purpose loan that can be used for your business or personal needs.

[loanagainstpropertyindiablog]

IDBI Bank introduces Reverse Mortgage Loan for senior citizens. It seeks to monetize the house as an asset and specifically the owner’s equity in the house.

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The Problem With Property Loan

The latest in Reserve Bank of India’s measures to protect customers with home loans is a proposal to change the way banks determine their `base rate’ – the benchmark for all floating rate loans. The need for a re-look arose because customers have been complaining of a raw deal in pricing.

In recent years RBI has taken a number of measures to provide a better deal for home loan borrowers. The introduction of base rate ensured that banks do not reduce rates only for new customers by playing with the interest spread. In the past banks could play with the spread as they would lend below the prime lending rate (their earlier benchmark) for new customers while old customers continued to pay over the PLR.  This was not possible with the `base rate’ which was also the floor rate for pricing. In June 2012 RBI forbade banks from imposing a penalty on pre-payment of home loans irrespective of whether the loans were being refinanced or repaid. This made it possible for disgruntled borrowers to move away to rivals if their loans were not re-priced when interest rates were falling.

But there are a number of areas RBI could look into as part of its consumer protection initiative. Here are a few.

Compulsory insurance: Banks have an interest in the property mortgaged with them and they need to ensure that it is protected against any eventuality. At the same time banks also gain by selling insurance policies. But what needs to be insured is the cost of construction and not the cost of land. A 1000 square foot house may cost Rs 2 crore in Mumbai but the cost of construction would be around Rs 20 lakh. So there is no need of buying property insurance for the whole loan amount. Yet many banks insist that the buyer pay 15-year insurance premium upfront based on the market value of the property rather than the construction cost. Also in cities like Mumbai, the property is owned by the cooperative society which is required to insure the property. It is therefore not clear whether the bank’s insurance policy will pay a claim when the housing society is also making a claim for the property damage.

Non-intimation of interest rate changes:  Most Property Loan borrowers focus on the interest rate at the time of availing home loans. But floating rates are dynamic and vary from time to time. The borrower is not aware of this because while rates vary, the equated monthly installment or EMI does not. Banks merely change the tenure of the loan. So in a rising interest rate regime it is not unusual for borrowers to find that their principal loan amount is unchanged even after years of repayment. Very rarely does a bank communicate to the borrower changes in interest rates.

Notice of intimation of mortgage: In Maharashtra the government has made it compulsory for all mortgage interests to be registered. This is aimed at preventing fraudulent sale of the property even as a loan is outstanding.  While the objective is laudable, the trouble is with the process. Although the law actually protects the bank’s interest lenders have shifted the onus on the borrower. Rather than use their institutional clout to facilitate smooth registration, borrowers are forced to approach agents and spend a few thousands to complete this process.

No refinancing of existing loans:  Lenders often poach from home loan borrowers of other institutions. But when it comes to their existing customer they do not offer them the benefit of new rates.  If there is a special scheme running in the bank, existing borrowers are not informed of it. Also banks charge customers a processing fee even when their loan is refinanced within by their own bank but under a different scheme.

Complex pricing: Some banks have resorted to complicating the pricing of home loans introducing interest free years in middle of the tenure of the loan. Innovation in financial products are good only as long as they do not obscure pricing. Borrowers need to have the opportunity to compare the cost of one home loan against another.  One way to make the pricing transparent is to disclose the cost in the form of annualised yield to the lender based on prevailing rates.

Source: http://blogs.timesofindia.indiatimes.com/small-change/the-problem-with-home-loans/

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Let your Property Loan be a shelter to your dreams. IDBI Bank Loan Against Property is a multi-purpose loan that can be used for your business or personal needs.

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Loan against property: Guaranteed Way of Arranging Funds

Person can get a loan against property only if a person provides collateral to the bank in the form of commercial property, house or flat. Person can use this amount for any personal purpose such as going for a vacation, for paying bills, house extension, initiating new business, education, house improvement, business expansion, marriage expenses, and purchase of goods, debt consolidation and many more. A loan against property means a loan given or disbursed against the credit of the property. Person can avail loan against property as a certain percentage of the property market value which is around 40% to 60%.

The various features of loan against property are:

 ·               A person can use this loan for any purpose or need whether it is professional or personal.

·               The Person can get a loan against property on fully constructed property.

·               Person can get a loan at the cheapest interest rates. Banks provide two types of interest rates such as fixed rates and floating interest rates.

·               Person can get an amount of loan up to 60 to 65% of the market value. It depends upon the person property or flat.

·               The client can pay off the loan amount through EMI or monthly installments.

·               Person has to pay off the amount of loan range from 10 to 15 years.

·               Loan against property is a secured loan.

·               The process of Loan against Property is easy, convenient and hassle free.

·               The banks charge 13-18% of the rate of interest on the loan against property amount, which totally depends on the amount of loan and person's profile.

·               Person has to get minimum of Rs.10 Lakhs for getting loan against property.

·               A person can get a loan up to Rs.10cr.

The tenure provided by the bank is 10 years. The loan amount needs to be repaying in the form of EMIs. In any case, person want to avail loan more than 25 lakh, person need to mention the reason for getting a loan. The loan amount person can get against property can range from 10 Lakhs to 3 crore. This amount is depending upon the property person pledge. The amount of the loan also varies from bank to bank. The age limit of person lies between 21 to 60 years.

Source: http://loan-against-property-guaranteed-way.blogspot.in/2012/10/loan-against-property-guaranteed-way-of.html

[loanagainstpropertyindiablog]

Let your property be a shelter to your dreams. IDBI Bank Loans against Property is a multi-purpose loan that can be used for your business or personal needs.

[loanagainstpropertyindiablog]

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs.

[loanagainstpropertyindiablog]

Let your property be a shelter to your dreams. IDBI Bank Property Loan is a multi-purpose loan that can be used for your business or personal needs.

[loanagainstpropertyindiablog]

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs.

[loanagainstpropertyindiablog]

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs.

[loanagainstpropertyindiablog]

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs. Loans against Property

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Loans against property: a time bomb ticking away?

The biggest risk factor is the fact that some of the LAP customers have been using it as a loan in perpetuity

In the fiscal year that ended 31 March, credit growth of India’s banking industry dropped to an 18-month low. The microfinance industry, in contrast, saw its loan book grow at the fastest pace and for a few it more than doubled. The scenario has not changed for banks in the past few months; year-on-year credit growth is now 9.8%. There are hardly any takers for loans from the corporate sector; the saving grace has been mortgages and retail loans.

At around Rs.12 trillion, the mortgage market in India is a little less than 10% of the size of its economy even as the overall bank credit market is about 50% of the nation’s gross domestic product or GDP. Indeed, the mortgage market has been growing at a fairly robust pace over the past decade but it is still small compared with other nations. For instance, the Chinese mortgage market is about 20% of its GDP; for the UK and the US, it has been 88% and 81%, respectively, while in Denmark, it is more than the GDP.

Home loans are the safest bet for Indian bankers, as they are backed by securities and the amount of loan is always less than the value of the property. In case of a default, the property can always be seized and sold to recover the money. Also, most banks and non-banks finance the first home purchase of salaried individuals; income verification for such home buyers is not difficult and affordability can be judged transparently. Typically, around 40% of monthly income is used to service the loan in the form of equated monthly instalments. However, within the home loan market, the increasing popularity of loans against property or LAP is causing some discomfort. A few analysts say that LAP is a ticking time bomb.

LAP is the equivalent of home-equity loans internationally.Santanu Chakrabarti, an analyst with Bank who tracks non-banking financial companies, says LAP is a growth-driving profitable product for most new companies in the mortgage market. Even the large and established players, according to him, have significant presence in this market, but the non-bank entities are the major players. For a few of them, LAP could be more than 50% of their total mortgage book. Those non-banks who want the refinance facility of National Housing Bank (NHB), the home loan regulator, the exposure to LAP cannot cross 25% of the loan book. Some of the non-banks have stopped taking NHB refinance as they want more LAP in their books.

To be sure, LAP is a secured loan. It takes a residential or a commercial property as collateral; self-employed individuals and professionals are LAP customers. Such loans are typically taken to support business in the form of expansion, diversification, consolidation or even meeting working capital needs. It is also taken for personal use like weddings, education, medical exigencies, repayment of previous loans and debt consolidation. According to rating agency Crisil Ltd, about 75% LAP customers are self-employed individuals doing business, 15% are salaried and the rest self-employed professionals.

The average LAP ticket size is higher than a home loan; its tenure is also shorter than the home loan, with the average being four to five years against 10-11 years for home loans. Typically, the interest rate for LAP is always 4-5 percentage points higher than the home loan rate. Similarly, the loan-instalment-to-income ratio is also higher for LAP—at least 50% against 40% for home loans. Finally, the loan-to-value ratio for LAP is lower—around 60% against 80% for home loans. In other words, a home buyer can get a Rs.80 lakh loan to buy a Rs.1 crore property but for LAP, a Rs.1 crore worth of property will fetch a loan of Rs.60 lakh.

There is nothing illegal about LAP but most credit appraisers are wary of its inherent credit risk. There are reasons for that. A customer willing to borrow at a high rate is most likely to be facing financial stress. Lenders also do not have any control over the end use of the money. LAP is essentially a cash out of primary residential and/or commercial property, often the core asset of a small and medium entrepreneur (SME)—a segment which is under huge stress primarily due to cash flow issues in business following the delay in payments across the supply chain in both manufacturing and servicing sectors. A few banks and housing finance companies have already been hit by frauds in the LAP segment. One such company, based in Maharashtra, has sacked its entire top brass which was overseeing the LAP business.

The biggest risk factor is the fact that some of the LAP customers have been using it as a loan in perpetuity. Riding on the rise in housing prices, they are taking fresh Loan against Property to pay off the existing lender. It’s simple arithmetic. For an Rs.1 crore property, a borrower can raise Rs.60 lakh today and a few months down the line, when the property price goes up to Rs.1.1 crore, they can raise Rs.66 lakh and pay off the first lender. The cycle can go on till the property prices crash. If indeed that happens, most loans will be close to the actual value of the property and in case of defaults, exit will not be easy for the lenders.

Source: https://loanagainstpropertyindia.quora.com/Loans-against-property-a-time-bomb-ticking-away

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Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs. Property Loan

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Home Loan or Property Loan? Picking the better investment

A home loan is a loan that is advanced to you by a lender to assist you in buying a house. This amount needs to be repaid to your lender in monthly instalments.

If you apply for loan against property, you will receive a loan against the mortgage of your property. This means that your property is your security in the event that you are unable to pay back the loan. This loan is usually between 40% to 60% of your property’s value, and can sometimes go up to 70%. You can take a Property Loan with benefits like EMI-free months and Zero-Penalty Foreclosures.

What’s great About These Loans? Home loan:

Your capital     goes up: Property prices in India have been skyrocketing over the past     decade. Buying a home is the best investment you can make to tackle     inflation, and ensure that you have a large reserve of funds in the     future.

Easy interest     rates: Home loan interest rate is much lower than most loans – anywhere     between 9.50% to 13%. This makes repaying a home loan cheap and easy on     your finances. To apply for home loan at lowest interest rate, and you can     avail of rates that go as low as 9.75.

Renting vs.     Buying: Buying a house is expensive, but can prove to     be profitable in the long run. Buying a house means paying EMIs every     month, but with the surge in property values, you’ll have a valuable asset     by the end of your loan tenure. If you rent a house, the increasing real     estate prices will result in an increase in your monthly rental payments.

Home loans are also quickly processed and disbursed, so you won’t have to deal with delays when you apply for this type of loan. You can apply online for home loan at Bajaj Finserv, or you can transfer your existing Home Loan!

Loan against Property:

It’s your property: When you apply for loan against property, you still maintain ownership of your property. This means that     you continue to live in your own home and make monthly loan payments to     retain your ownership.

You can sell it if you want to: If you’re unable to make monthly payments or feel like you won’t be able to in the future, you could sell your property. Since the loan is only a percentage of your property’s value, you can repay the loan and be left with surplus funds.

Plot loan interest rates:

The tenure for a property loan can be anywhere between 1 – 15 years. The average rate of interest lies between 12% and 17%. The combination of these factors ensures that property loans are easily repayable.

You can make more money:

If you’re a businessman who has taken a plot loan in India, you can expand your business using your property. With rising property prices, you can refinance your property at a higher value, which will grant you an increase in your loan amount. Using the additional funds, you can work towards business expansion.

Both types of loans have benefits that make them ideal for different situations. If you’re looking to buy a house, availing a home loan would be the best option because it’s the reason that home loans are provided. If you’re in need of quick funds, taking a property loan is a good option. You can pledge your property as collateral and use the funds for any activity you desire; the lender cannot question what you spend the money on.

It’s not hard to decide which of these loans to choose, because both these loans are utilised for completely different purposes.

Source:https://propertyloan.quora.com/Home-Loanor-Property-Loan-Picking-the-better-investment