If you are reading about area calculators and area converters, it is quite likely that you want to get a loan against property to pay for something you need right away. If you want to use a property as collateral for a loan, you will first need to figure out how much land you want to use as collateral.
Why do you need an area converter and calculator?
When you need to figure out the size of a piece of land for valuation purposes, you can use an online land calculator. If you want a loan against property (LAP), the lender will want to do a valuation of your property to decide how much you can borrow and how much interest you will pay.
Once your land has been valued, the lender will decide how much of a loan to give you based on the LTV ratio. Your EMI will depend on the interest rate, loan term, and loan amount that the lender gives you. Online EMI calculators are a great way to figure out how much your monthly payments are going to be.
What is a loan against property?
A loan against property is a type of secured loan that both salaried and self-employed individuals can apply for and use. The loan is approved once you put an immovable asset as collateral. The lender agrees to give you the credit amount, which is the same as a percentage of the property’s current value. As a loan buyer, you can mortgage a home you live in, a home you rent out, or any land you own. However, you must ensure that there are no liens on the property’s title.
What is LTV or loan to value ratio?
People take out loans when they need money. It’s easy to get a loan if you have property or other assets to put up as collateral with the lender. The loan amount is not the full value of the property. Instead, it is a certain percentage of the property’s value, which is based on things like the type of property, how old it is, your monthly income, your other financial obligations, and the lender’s policy at the time you apply for the loan. The Loan to Value Ratio (LTV) is the amount of the loan as a percentage of the property’s appraised value.
How is LTV calculated?
The maximum allowed LTV for a given borrower is set by the lender’s guidelines. This LTV is then multiplied by the property’s current appraised value to find out how much of a loan can be given against it.
So, if the lender’s LTV calculator has set the LTV to 60% and the property is worth INR 50 lakhs, then the LTV calculation formula says that the LTV is 60% of INR 50 lakhs i.e., INR 30 lakhs.
Once you know how much loan you can get, it’s time to research interest rates and calculate the expected EMI you will be paying. You can calculate EMI using a property loan EMI calculator.
How to use property loan EMI calculator?
It’s easy. If you put in the length of the loan, the interest rate, and the total amount of the loan, your EMI would be displayed.
For example, let’s say you need a loan against property for INR 2 Crore with 20 years to pay it back. Set the slider for “Loan Amount” to “2 Crore.” Next, on “Loan Tenor,” choose “20” years. Then, use the “Rate of Interest” slider to choose how much interest you want to pay. You can use the EMI calculator as many times as you need to find the best option for you.
Now, it’s time to know if you are eligible to take out a loan against property.
Loan against property eligibility
Lenders give Loans Against Property to salaried, professional, and self-employed people at the current prevailing rates. Make sure you meet the requirements to get a Loan Against Property so you can take advantage of all the loan has to offer.
Applicants who are salaried and professionals
- The applicants must be Indian citizens who live in a city where the lender does business.
- Applicants must be between the ages of 28 and 58.
- Applicants must have worked for at least three years for a public or private company or an MNC.
Applicants who are self-employed
- The applicants must be Indian citizens who live in a city where the lender does business.
- Applicants must be between the ages of 25 and 70.
- Applicants must have been at their current business for at least 5 years.
Documents needed for loan against property
Property loan eligibility documentation requirements are minimal. Here are some of the most important documents you will need to submit to process your loan. Once the paperwork has been verified, the loan amount can be issued.
- Proof of identity and residence: PAN card, voter’s ID, driver’s license, or passport
- Proof of income: bank account statements, tax returns, etc.
- Regarding property: the buyer agreement, the title deed, the property tax receipts, etc.
- Other documents: Documents about the businesses and ventures that were declared (in the case of self-employed applicants)
Note that this list is not exhaustive and may change based on your loan application.
Final thoughts
If you are thinking of borrowing money through a LAP the first thing to do is property valuation. An area calculator and area converter will come in handy while doing so.
Apart from this, if you are interested to know about Legendary Real Estate then visit our Real Estate category.
