What is a Loan Against Rentals?
May 18, 2017 Home Loan
Loan against rentals is the mode through which home buyers can take a loan from housing finance institutions against future rentals income. Almost all the public sector banks and finance institutes give out a loan against future rentals for their property which is let out.
Any person who has a commercial or residential property can apply for a loan against the rental. If the property is owned jointly then all the owners have to become the applicants of the loan. This option is available for the properties that have been let out to those, for which the lease agreement has been made.
What is the purpose of these loans?
There are various ways in which the amount acquired against the loan can be used. It ca be used for educational purposes, renovating the property, expanding the business or to invest in another property. Lenders also allow these loans to pay off the other existing loans.
Which property is eligible for the loan?
Any commercial property that has been leased to a reliable institution or government offices, can be used to take a loan against it. Even residential properties are eligible for the loan, given they have a valid rental agreement and is duly registered.
Documents required:
Documents like address proof, identity are required by the loan lender to approve the loan. If the borrower is a salaried person then Form 16 is enough. However, if the borrower is a self employed person then they are required to submit the details audited accounts. If the accounts are not audited, then they need to submit ITR form for the last two to three years.
The loan is secured and the property that is already leased out. If the borrower already has a loan for another property, then the lender will not be very willing to give out another loan. Though keeping another property as a security, borrowers can take a loan.
The interest of loan is between 10 percent and 13 percent per annum, for the maximum time period of 10 years. Though the loan tenure cannot exceed the time period left for the residual loan on the leased property. To avail this loan, the credit history of the borrower must be good, else it becomes difficult to obtain the loan.
Any person who has a commercial or residential property can apply for a loan against the rental. If the property is owned jointly then all the owners have to become the applicants of the loan. This option is available for the properties that have been let out to those, for which the lease agreement has been made.
What is the purpose of these loans?
There are various ways in which the amount acquired against the loan can be used. It ca be used for educational purposes, renovating the property, expanding the business or to invest in another property. Lenders also allow these loans to pay off the other existing loans.
Which property is eligible for the loan?
Any commercial property that has been leased to a reliable institution or government offices, can be used to take a loan against it. Even residential properties are eligible for the loan, given they have a valid rental agreement and is duly registered.
Documents required:
Documents like address proof, identity are required by the loan lender to approve the loan. If the borrower is a salaried person then Form 16 is enough. However, if the borrower is a self employed person then they are required to submit the details audited accounts. If the accounts are not audited, then they need to submit ITR form for the last two to three years.
The loan is secured and the property that is already leased out. If the borrower already has a loan for another property, then the lender will not be very willing to give out another loan. Though keeping another property as a security, borrowers can take a loan.
The interest of loan is between 10 percent and 13 percent per annum, for the maximum time period of 10 years. Though the loan tenure cannot exceed the time period left for the residual loan on the leased property. To avail this loan, the credit history of the borrower must be good, else it becomes difficult to obtain the loan.
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