Loan against Property in a Mumbai or a Home Loan: Understand Your Requirements

Home Loan is a loan that is offered to person by banks to buy a house. This amount has to be repaid by the borrower to the lenders through monthly installments also known as EMI. However, Loan against Property in a Mumbai is where you will receive money from the bank by mortgaging your property. Here your property will act as a security deposit for the money that is rendered by the bank. And until the repayment of the loan amount, the original documents of the property will be under banks custody. In case if the borrower fails to repay the loan amount, banks will move legal procedure to own the property.

Purpose:

Home loan is granted for purchase or procurement of a house. Loan against property is used to grant loan for borrowers against the security of existing property. In simple, home loan helps in procuring a property whereas loan against property will help borrowers to get the loan sanctioned on the basis of existing property.

Interest:

The rate of interest on home loans is comparatively lower than ‘loan against property’. This is due to the reason of bank sanction loan against property in Mumbai and the chance of defaults.

Quantum of Loan:

Home loans are granted by banks up to 90% of the property value, however, loan against property is granted only up to 60% of the property value. The benefits on home loans are available as RBI and Government is promoting housing facilities all over the country through banks. The aim is “housing for all”.

Tax Exemption:

Tax deductions are available under section 24 for interest and 80C for the principal on home loans. This benefit is not available for a loan against property. However, in case if you are taking a loan against the property for business purposes, then tax deductions are applicable for interest under “income from business or profession”. And there is no tax deduction for the principal of a loan against property.COMMERCIAL LOANS IN MUMBAI.

Tenure of Loan:

Home loans can be granted up to 30 years considering the age and eligibility of the applicant whereas loan against property is offered only up to the tenure of 15 years by almost all banks and Finance Bazar.

Prepayment Charges:

In the case of home loan some banks will waive off prepayment charges as for being RBI guidelines, however, this charge is applied on prepayment of loan against property.

Restrictions:

All provisions, policies, and procedures of home loan are relaxed and it is easier to get a home loan as compared to loan against property. There is a lot of documentations and the process is quite time to consume for a loan against property. It is even possible to get a home loan sanctioned within 15 days but loan against property takes longer time as banks and Finance Bazar have they need to check applicant’s details and property details.COMMERCIAL LOANS IN MUMBAI.

Monitoring:

Money received from a loan against property can be freely used for various purposes as per borrower requirements. This amount cannot be used for stock market investment, gambling, speculative business and similar other needs. However, home loans have to be strictly used for procuring a house. Banks will monitor home loans to check if it used for buying a house and site visits are conducted before and after sanctioning loan.

Nature of Property:

Home loan is offered only for residential purposes like construction or buying a house. However, loan against property can be used for commercial, residential and industrial properties.