How to Unlock the Value of Your Real Estate with Property Mortgage Loans

You can unlock the value of your property by using it as collateral to access a lump sum while continuing to own and use it. Instead of selling your property, you borrow against it through a property mortgage loan, commonly known as a Loan Against Property. This blog outlines practical steps to get started and highlights the key benefits you should be aware of before applying.

How to Unlock Value with a Property Mortgage Loan

Follow these steps to convert your property into usable funds with a property mortgage loan or a Loan Against Property:

• Check your eligibility first: Ensure you are an Indian resident or NRI, aged 21-70 years, with a stable income and a CIBIL score of 700+. Lenders assess your debt-to-income ratio and clear the property title.
• Get your property valued accurately: Professional appraisers evaluate location, build quality, age, legal clearances, and market trends to fix the value. This determines your loan amount and tenure, which can range from 15 to 20 years, depending on the lender.
• Gather required documents: Prepare KYC (Aadhaar, PAN, Voter ID), income proofs (salary slips, ITRs, 6-month bank statements), property papers (title deed, sale deed, approved plans, encumbrance certificate, NOC from society), and business proofs if applicable.
• Compare lenders and apply: Compare NBFCs and banks based on interest rates, processing fees, tenure options, and overall loan terms. Use online EMI calculators to understand monthly outgo, then submit your application online or in person at a branch.
• Complete verification and legal checks: Expect site visits for technical inspection and title search for disputes. Review the sanction letter for the loan amount, rate, and terms.
• Sign and receive funds: Execute the mortgage deed, provide ECS mandate, or post-dated cheques. Disbursal happens quickly to your account, with the property mortgaged as security.

Also Read: How to Secure a Loan Against Property?

Benefits of a Loan Against Property

A Loan Against Property offers practical advantages for Indian borrowers managing monthly budgets.

• Lower interest rates: Interest rates are typically lower compared to unsecured borrowing options like a Personal Loan. This is due to property collateral, resulting in a lower lending risk and a lighter EMI burden for you. For example, a ₹50 Lakh loan over 10 years at 10% will have an EMI of about ₹79,600.
• Higher loan amounts: Access 50-70% of your property’s market value, subject to lender policies and your income profile. For example, if your property is valued at ₹3 crore, you may be eligible for a Loan Against Property of about ₹1.5-₹2.1 Crore, which can fund big goals like business expansion and large education expenses.
• Flexible tenure and use: Repay over 5-20 years (varies as per the lender) with end-use freedom. You get to retain property ownership and can also rent it for extra income.
• Quick processing: Digital applications and field checks get quick approval, faster than unsecured loans, with minimal paperwork if organised and submitted correctly.
• Tax advantages: Salaried borrowers who use the loan to purchase, construct, or repair a residential property may claim an interest deduction under Section 24(b) up to ₹2 lakh per year, subject to conditions. If the loan funds are used for business, the interest can be claimed as a business expense under Section 37(1) of the Income Tax Act.

Also Read: Understanding Property Valuation Process for Loan Against Property Approval

To Conclude

A property mortgage loan lets you unlock the value of your real estate without giving up ownership. By understanding factors such as eligibility, valuation, and legal verification, you can access funds smoothly. With benefits such as lower interest rates and higher loan amounts, it’s a practical option for meeting long-term needs.

If you’re looking for a hassle-free Loan Against Property, Poonawalla Fincorp offers structured solutions with competitive rates, clear terms, and a smooth application process. Apply online on the Poonawalla Fincorp website.

FAQs

What is the maximum loan amount I can get against my property?

You can typically borrow up to 60-70% of the property’s market value, depending on the lender, property type, and your income profile.

Is a good CIBIL score mandatory for a Loan Against Property?

A higher CIBIL score improves approval chances and interest rates, but lenders also consider income stability and property quality.

Are there tax benefits on a Loan Against Property?

If the funds are used for the purchase, construction, or improvement of a house property, interest may be deductible under Section 24(b), subject to conditions. For business use, interest can be claimed as a business expense under Section 37(1), as applicable.