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 Documentation |
| Salaried/Proprietorship Firm: |
- 12 months bank statement reflecting Rent Credit.
- Copy of Lease Deed.
- Form 16/ITR and balancesheet of last 2 years (Optional).
- Photo ID /Residence/Age & Signature Proof.
- One Photograph.
- Assignment of rental/lease in favour of the lending institution.
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Business Establishment : |
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| Partnership Firm : |
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- Last 2 years Income Tax Acknowledgement.
- Last 2 years Financials certified by Chartered Accountant.
- 12 months bank statement reflecting Rent Credit.
- Copy of Lease Deed.
- Business Profile.
- Business Address Proof.
- Photo ID /Residence/Age/Passport sized photograph & Signature Proof of the partner authorised for the said purpose.
- Assignment of rental/lease in favour of the lending institution.
- Copy of partnership deed.
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| Private Limited /Limited Company: |
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- Last 2 years Income Tax Acknowledgement.
- Last 2 years Financials certified by Chartered Accountant.
- 12 months bank statement reflecting Rent Credit.
- Copy of Lease Deed.
- Business Profile.
- Business Address Proof.
- Assignment of rental/lease in favour of the lending institution.
- Share holding pattern of the Company certified by a Chartered Accountant.
- Memorandum & Articles of Association.
- List of Directors of the Company.
- Photo ID /Residence/Age/Passport sized photograph & Signature Proof of the authorised signatory on behalf of the company.
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| Transparency Aspects |
| Before choosing your lending institution you must ensure a transparency on the followings: |
- Rate of interest.
- Spread viz-a-viz to the Benchmark / Reference Lending Rate.
- Processing fee.
- Penal charges.
- Cheque bouncing charges.
- Collection charges.
- Fore-closure charges / Part pre-payment charges.
- Property Insurance Charges.
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| Rate of Interest: |
The Banks/Financial Institutions are offering floating and fixed rate of interest to their borrowers and some are even offering a combo of fixed and floating rates. In today's scenario of fluctuating interest rates, borrower is always apprehensive and confused about opting for a fixed or floating option. However conventionally the trend in the Indian market has been that the most of the borrowers have chosen the floating rate option. |
| Exercise the following before opting for floating rate: |
| Benchmark Rate: |
Any bank may increase or decrease their rates as per Benchmark rates (the rate on which the Banks decides the present rate). This Benchmark rate could be linked to the Market Reference Rate (MRR) as, Bank’s Prime leading rate or if it is mortgage specific rate like Home Prime Leading Rate (HPLR). Always ask for the spread or the discount you can get viz-a-viz to the MRR or any such Benchmark rate …… from the respective Bank. |
| Myth of Fixed: .....Is Fixed a Fixed.......???? |
Make sure when you opt for a fixed rate, you must know if the fixed rate offered to you is fixed for the entire loan repayment tenure or just for a limited period and whether it gives you a switching option also....? i.e. switching from fixed to floating and vice versa. So make sure that you are told about the switching cost too. |
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| Legal Aspects |
Every Bank / HFCs / Finance Institution have their own method of evaluating and appraising the property legally from their approved panel of lawyers. |
However, most importantly the property should have a valid and clear marketable title and the institution should be able to create an equitable mortgage on the property and it should be free from all encumbrance, lien and charges etc. As a matter of practice majority of the institutions verify the ownership chain for last 13 years and they ask for the documents accordingly. Please note that the criteria of appraising a property for lending may vary from institution to institution. |
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| Valuation Aspects |
In the wake of the present court rulings and sealing drive by the MCDs (local municipal bodies), most of the banks, HFCs & Financial Institutions are very cautious and they ensure that the property on which they extend the funding should be an approved sanctioned map and it should be constructed as per the laws of the MCDs/Governing bodies etc. |
Most banks are offering 60-80% loan on the value of the property. Every institution get the property appraised and valued technically from their own panel of approved valuers. However, the valuation and lending matrix may vary from institution to institution and is subject to their lending norms. |
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| Snapshots |
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Salaried |
Self Employed/
Partnership Firm/
Private Limited/
Limited Company |
Self Employed Prof.* |
Minimum loan amount |
5 Lacs |
5 Lacs |
5 Lacs |
Maximum loan amount* |
upto 15 crores |
upto 15 crores |
upto 15 crores |
Minimum Age |
24 Years |
24 Years |
24 Years |
Maximum age on loan maturity |
60 years |
65 years |
65 years |
Minimum Income
criteria |
Rs 10000/- per month
(in hand) |
1.5 Lacs/annum |
1.5 Lacs/annum |
Maximum tenure of repayment* |
120+ months |
120+ months |
120+ months |
LTV |
70-80 % of the property value |
60-70 % of the property value |
70-80 % of the property value |
Rate of Interest |
13%-14.5% floating |
13%-14.5% floating |
13%-14.5% floating |
Stability & Continuity |
Minimum 1 year in current job with 2 years experience. Less than 1 year in current job with 3 years job continuity. |
Minimum 3 years of business continuity. |
Minimum 3 years of business continuity. |
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*The criteria stated above may vary from institution to institution and are subject to change as per the policy of the respective banks/ Institution .The borrowers are always advised to check with lending institutions about the above stated terms before getting into an agreement. |
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