How property valuation maximises your loan against property

Loan against property is a very popular form of credit used by businesses as well as individuals. This allows you to quickly arrange funds by leveraging an unused plot or house property. And if your property is in the popular part of town, the property valuation and the loan amount can even be astronomical.

Loan against property involves standardised paperwork, clearly defined property valuation, flexible repayment, and a hassle-free process. If you choose the right property and lender, you can get the maximum loan against your property.

If you plan to apply for a loan against property, a clear understanding of the loan and valuation process will be helpful.  

Why is a loan against property popular?
 

Some of the common reasons that make loans against property popular include –

1. Eligibility – In unsecured loans, your income and credit record are the primary factors that decide your eligibility. However, in a loan against property, these are less of a concern if you have a suitable property. 
   
   
2. Affordability – These loans are secured, which covers the default risk of the lender. As a result, the interest rates are lower than unsecured loans. This makes a loan against property an affordable credit option.
   
   
3. Versatility – It offers the affordability of a secured loan with the versatility of a personal loan. Unlike secured loans like home loans or car loans, you can use a loan against property for a variety of purposes.
   
   
4. Property usability – Even after you use your real estate property as a mortgage, you can continue to use it. For instance, you can repay the loan using your rental property and the rent received.

As a borrower, you will consider a loan against property for all the above reasons. But to enjoy the benefits to the hilt, you must ensure that the property valuation is optimal.

Basics of property valuation
 

Property valuation eventually decides how much loan is sanctioned against your application. The property valuation amount may vary from one bank to another. A percentage of such amount is then approved for loan. This percentage is commonly known as the Loan to Value (LTV) ratio. Even the LTV ratio differs from one bank to another.

Therefore, while selecting a loan against property, you must compare the property value the bank calculated and the LTV ratio offered. If you ask a bank how to calculate property valuation, here are some of the factors they are likely to point out –

1. The value of a property in a posh location is higher than one in a rural area
2. A recently built property with well-demarcated boundary walls has a higher value than an ill-maintained or dilapidated property
3. The recent market value of similar properties in the area is considered
4. Properties with the latest fixtures and fittings have an enhanced value
5. Access to the property, including vehicular access and its parking space, also adds value
6. The size of the plot and the property and the number of rooms and bathrooms enhance the valuation

Considering these factors, you can find out how to check the valuation of property.

What happens after property valuation?
 

Once your bank completes the property valuation, it will propose a loan against the property. As mentioned earlier, the loan amount is subject to the LTV calculation.

Lenders generally don’t have a specific LTV ratio. You will find the LTV ratio within a specific range or up to a certain percentage. Certain factors must work in your favour to get a loan approved with a higher LTV ratio. These factors include –

1. Property ownership – The lending bank ascertains that the title of the property is clear and not under any dispute. In the case of co-owned properties, many banks prefer a loan application by all the co-owners.
   
   
2. Property valuation – A high LTV is immaterial if the property valuation is low and vice versa. A high loan value is possible only when both property valuation and LTV ratio are high.
   
   
3. Loan tenure – If you choose a longer loan tenure, your EMI will be lower. The lender may approve a higher loan amount in this case. For them, your lower repayment burden means a lower default risk. 
   
   
4. Repayment capacity – Although the loan is secured against your property, your repayment capacity makes a difference. A higher repayment capacity encourages lending banks to approve a higher loan amount. Repayment capacity is considered high if you have a stable and high income, good repayment track record, low existing liability, etc.

Maximising your loan against property
 

IDFC FIRST Bank Loan Against Property is designed to help you maximise the value of your property. Here is a look at some of the features that help you maximise your loan benefits,/span> with IDFC FIRST Bank –

1. High LTV – IDFC FIRST Bank Loan Against Property has a high LTV of up to 80%. Mathematically, if your property valuation is ₹1 crore, you can get a loan of up to ₹80 lakhs.
   
   
2. Wide range of eligible properties – With IDFC FIRST Bank, your eligible property is not limited to a residential house and plot. Commercial real estate, industrial plots, godowns, etc., can also be furnished for the loan.
   
   
3. Multiple basis options - You can apply for the loan against the property based on multiple documentation options. You can apply based on your bank account statement, GST returns, or income records.
   
   
4. Optimise property valuation – Apart from the conventional loan against your property valuation, IDFC FIRST Bank offers alternatives like –
   1. Loan against your rental income
   2. Loan to purchase commercial property or plot, using the to-be-purchased property as the security
   3. Use a pre-approved dropline overdraft. You get a pre-approved line of credit with only borrowing costs on the utilised amount. It remains available at all times and can be repaid at your convenience

Apart from maximising property valuation, you get a host of other benefits with the IDFC FIRST Bank Loan Against Property. These benefits include –

1. High loan limits – Loans of up to ₹15 crore can be applied under this loan category.
2. Easy repayment – Repayments can be spread across a tenure of up to 25 years.
3. Availability – This loan is available to self-employed professionals, non-professionals as well as various business entities.
4. Attractive interest rate - IDFC FIRST Bank Loan Against Property offers competitive interest rates. You can also save interest costs on top-up loans and balance transfers of existing loans.

Loans with a fair property valuation
 

IDFC FIRST Bank Loan Against Property is available through a simple process with minimal and transparent documentation. The streamlined process ensures a fair property valuation on a wide range of property categories. Whether you are a self-employed individual or a business owner, you can unlock the true worth of your property and boost your finances with IDFC FIRST Bank Loan Against Property.