Loan Against Property
Non-Housing Loans made easy
Loan against property (Residential/Commercial)
| Interest Rate | Starting from 8.50%* (ROIs linked to CIBIL score) |
|---|---|
| Prepayment Charges | As per bank’s policy |
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Best offerings of Leading Banks
| Sr No | Name of the Bank / NBFC | ROI(%) range | PF (% of loan amount + GST) | Tenure | LTV (%) |
|---|---|---|---|---|---|
| 1 | SBI | 9.80 to 10.80 | 1% | 10 years | 60 to 65% |
| 2 | HDFC | 9.00 to 11.90 | 0.75% to 1.5% | 15 years | 50 to 60% |
| 3 | HDFC Bank | 9.50 to 10.50 | Max of 1% | 15 years | 65% |
| 4 | ICICI Bank | 9.75 to 10.90 | 1% | 15 years | 60% |
| 5 | Kotak Bank | 9.15 onwards | 1% | 15 years | 60% |
| 6 | LIC Housing Finance | 9.10 to 10.75 | 1% | 15 years | 70% |
| 7 | TATA Capital | 9.85% onwards | 1% to 1.25% | 20 years | 60% |
Why you should choose PROFOUND for Non housing loans
Non-Housing Loans are specialised Loans and you need someone who can help you to make the right choice, if you go wrong in selection then you not only end up paying more interest but also gets bound by the unwanted Terms and conditions for years to come, which are otherwise avoidable.
Let’s understand in detail how PROFOUND works for you.
We can go on and on and can give you 100 reasons for choosing PROFOUND but let me assure you, by choosing PROFOUND you are choosing best deal and best of professional experience of availing any financial product.
Non-Housing Loans
As the name suggests Non housing loans means loans which are given for the purpose other than buying residential property. Basically, following types of loans are categorised in to this category
As the name suggests this loan is against the residential property. This loan is also called home equity loan and popularly called as LAP loan (abbreviation of Loan against property). This loan is availed where borrower owns a property and he/she want to raise money by mortgaging that property. The funds can be used for the business of the borrower or any other productive use. The end use of the funds needs to be mentioned at the time of availing the loan. The property could be self-occupied residential property or residential property given on rent or vacant residential property. The property needs to be complete and possession needs to be with the borrower. Some Banks avoids vacant residential properties.
| Rate of interest | Processing Fees | Funding |
|---|---|---|
| The rate of interest for these loans is generally higher than the home loans. Currently the ROI is in the range of 8.5% to 11%. The rate of interest chart of the major banks and FIs is given in the table above. | The processing fees is in the range of 0.5% to 1% + GST (It differs from bank to bank) | As per the banks policy the funding amount will be 50% to 80% of the value of the property as assessed by the bank / FI. It can be combination of TL and CC / OD. |
As the name suggests this loan is against the commercial property. Commercial property can be in the form of Shop / office / warehouse / Industrial property. This loan is availed where borrower owns a property and he/she want to raise money by mortgaging that property. The funds can be used for the business of the borrower or any other productive use. The end use of the funds to be mentioned at the time of availing the loan. The property could be self-occupied shop / office or shop / office given on rent or vacant properties. The banks give more preference to occupied properties. The property needs to be complete and possession needs to be with the borrower.
| Rate of interest | Processing Fees | Funding |
|---|---|---|
| The rate of interest for these loans is generally slightly higher than the loan against the residential properties. Currently the ROI is in the range of 8.5% to 11%. The rate of interest chart of the major banks and FIs is given in the table above. | The processing fees is in the range of 0.5% to 1% + GST (It differs from bank to bank) | As per the banks policy the funding amount will be 50% to 80% of the value of the property as assessed by the bank / FI. It can be combination of TL and CC / OD. |
Lease rent discounting (popularly known as LRD) is a loan where the loan is given by discounting the rental cashflows and the EMI is directly collected from the monthly rental cashflow (An account known as escrow account is opened and the lessee (person who has taken property on rent) directly deposits the rent in the account and then the bank collects the EMI from the account. As the concept goes LRD is for commercial properties given on rent. LRD is a variation of product where the product remains commercial property purchase or loan against commercial property, only the mechanism to recover the EMI is different.
| Rate of interest | Processing Fees | Funding |
|---|---|---|
| The rate of interest is lower as this is considered to be product with lesser risk as the cash flows in the form of rent are there to guarantee the EMI recovery. The rate of interest is in the range of 8.5% to 11%. The rate of interest chart is given in the following table of the major banks and FIs. | The processing fees is in the range of 0.5% to 1% + GST (It differs from bank to bank) | As per the banks policy the funding amount will be 50% to 80% of the value of the property as assessed by the bank / FI. It can be combination of TL and CC / OD. While deciding the loan amount rental income is also considered. |
As the name suggests this loan is for purchase of commercial property. Commercial property can be in the form of Shop / office / warehouse / Industrial property. This loan is availed where borrower wants to buy property for office or to give it on rent. The funds are directly given to seller of the property. The property could be for self-occupation for business (office or shop) or for giving it on rent. The property can be either completed or under construction. Banks generally prefer funding completed properties however there are few banks funding under construction properties also.
| Rate of interest | Processing Fees | Funding |
|---|---|---|
| The rate of interest for these loans is generally slightly higher than the loan against the residential properties. Currently the ROI is in the range of 8.5% to 11%. The rate of interest chart of the major banks and FIs is given in the table above. | The processing fees is in the range of 0.5% to 1% + GST (It differs from bank to bank) | As per the banks policy the funding amount will be 90% of the agreement value or 75% of value of the property (as assessed by the bank / FI), whichever is lower. |
How eligibility is calculated for LAP loans
- Eligibility calculated as per the income norms of the Bank / FI.
- Eligibility calculated as a % of the property value / Agreement value as per the LTV norms of the Bank / FI.
Salaried cases
In salaried cases a certain % of the gross / Net salary (as per bank / FI policy, it ranges from 50% to 70%) is taken calculating the maximum total EMI a borrower(s) can pay per month. Existing EMI(s) (sum of all EMIs) of the borrower(s) is subtracted from the same to calculate the max EMI borrower can pay for the applied LAP loan.
Example: If a person is drawing a monthly gross salary of Rs.120000/- and already paying EMI of Rs.8000/- for car loan and Rs.5000/- for personal loan then the eligibility calculation will be as follows: Suppose Bank / FI as per policy and internal norms permits borrower to pay max EMI up to 55% of the gross income then in the above example max permissible total EMI for all the loans will be Rs.63000/- out of this borrower is already paying EMI of Rs.13000/- (Rs.8000/- for car loan and Rs.5000/- for personal loan. Then the max EMI left for home loan will be Rs.50000/- (Rs.63000- Rs.13000/-) Now it has been decided that the borrower can pay max Rs.50000/- as EMI for LAP loan, then the loan amount is calculated for which at the specified interest rate % and tenure of Loan the EMI will be Rs.50000/-
This can be done by taking EMI factor for 1 lakh. Say for a loan of 1 lac @ 8.25% for 15 years the EMI will be Rs. 970/-. Hence for Rs.50000/- EMI the loan amount will be Rs. 51.55 lacs. (50000/970)
Self-employed cases
For self-employed borrowers (borrowers engaged in business) calculating the income eligibility is a bit complicated and banks / FIs have their own policy norms to calculate the income. We can’t discuss all the policies and norms used for calculating the income but one common approach adopted by many of the banks / institutions is to calculate the cash profit as reported in the annual financials of the latest years can be taken as base and accordingly the income is calculated.
For self-employed customers while calculating income eligibility following factors are taken in to consideration.
- Overall business model
- Business Vintage
- Top line (Sales) and bottom line (Profit) with trend
- Credit history of individuals and businesses
- Banking
- Reference in the market
As per income norms borrower may be eligible for the higher loan amount but the loan amount will not exceed the maximum % threshold of the AV / MV of the property.