18 things you need to know about Mortgage Loans and Loans Against Property

Seeking answers on questions related to home loans, mortgage loans and Loans Against Property (LAP)? This handy Q&A guide will sort you out.

A diverse eligibility and availability criteria make it easy for salaried as well as self-employed people to apply for mortgage loans or home loans, based on their source of income, property details and other investments and collateral.

Let’s take a look at a key highlights you should stay informed about before applying for these types of loans

On eligibility:
 

What are the general factors taken into account while determining your eligibility for a mortgage loan?
 

1. Income
2. Age
3. Property Valuation
4. Existing Liabilities (if any)
5. Current Work Experience
6. Financial Documents

What will be the loan amount sanctioned to you?

You can get a LAP amount of up to 80% of the market value of your property, depending on your Bank’s policy and the property type and valuation. You can avail best LAP interest rates from IDFC FIRST Bank, starting at 7.35%. Click here to know more.

How will the Bank determine the current market value of my property?

The value of the property would be determined through a valuation conducted by the bank.

What will be the stages that my loan application will go through?
 

1. Application
2. Documentation and Processing
3. Under writing Verification, Personal discussion /Valuation
4. Sanctioning of the Loan
5. Disbursement

Is there any processing fee charged by the Bank?

Yes, you can refer to the Fees and Charges section of your Bank’s page. In the meantime, it would be good to know that IDFC FIRST Bank charges up to 3% of your loan amount, taken at the time of your loan agreement execution, as the processing fee. 

What are the documents required for applying for a LAP?
 

The rules for salaries and non-salaries individuals differ:

For salaried individuals:

1. Application form with photograph
2. Identity and Address Proof
3. Latest Salary Slips
4. Form 16
5. Bank Statements (Last 6 months)
6. Processing fee cheque
   

For Self-Employed:
 

1. Application form with photograph
2. Identity and Address Proof
3. Proof of business existence & Education Qualifications.
4. Last 3 years' ITR
5. Last 3 years' P&L and Balance Sheet
6. Bank Statements (Last 6 months)
7. Processing fee cheque

Do I need a co-applicant for my loan application?

Yes. All the co-owners of your property will have to sign up as co-applicants. For a sole property owner or applicant, one adult member in the family will need to sign up as a co-applicant. In case of partnership firm or a company, partners and promoter directors respectively need to be co-applicants.

How much time does the Bank take to disburse a loan?

Your loan shall be processed within 10-15 working days, subject to timely submission of documents and subject to the fulfilment of all the eligibility criteria of the bank.

Does the property have to be insured?

Yes, the property has to be insured against fire, flood, earthquakes and other appropriate hazards during the tenor of the loan.

Next, let’s understand the repayment and pre-payment better:

How can I repay my loan?

The repayment process for LAP is performed through EMI payments (Equated Monthly Installments). These can be paid through the usual Electronic Clearance System (ECS) or via Post Dated Cheques (PDC).

Can I pre-pay my loan?

Your Loan Against Property can be pre-paid along with the pre-payment charges. Usually the bank charges 3% of the principal pre-paid.

What security/collateral do I have to provide to avail the Loan Against Property?

Any residential or commercial property, which you wish to mortgage with a Bank, and which is technically and legally cleared by necessary government bodies, can be provided for Loan against Property (LAP).

Can I apply jointly with my spouse? Will both our salaries be taken into consideration for calculating the loan amount?

Yes! Your salaries can be clubbed for the purpose of the calculation of the loan amount. This can be done either when the property is jointly owned by your spouse and you, or when your spouse stands as a guarantor or your co-applicant.

What is Chain of Agreements in Loan Against Property?

Within the scope of Loan Against Property, Chain Agreements are documents traced right from the property’s first purchase by the builder/owner to the present owner. During the LAP availability process, you need to submit a chain of agreements to the Bank for a technical check and complete valuation of your property.

What is equitable mortgage in Loan Against Property?

An equitable mortgage is the transfer of an interest in property to a lender as a security for a loan of money. This is processed on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. The Bank disburses this loan by deposit of title deeds of the property with the lender.

What is Registered mortgage in Loan Against Property?

In this case, your property is registered with a sub-registrar and a charge is created against your property in government records.

What is Loan Against Property Balance Transfer?

Loan Against Property Balance Transfer or LAP BT allows you to transfer all your existing Loan Against Property agreements (LAP deeds) from a present banker to a new one. This is done either to get a better deal on your interest rate or if you are facing a service issue with the bank. At IDFC FIRST Bank, we believe in transparency and full disclosure at all times. Not to mention, the best-in-class service and interest rates on LAP!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.