Loan Against Land - 5 Things you Should Know

Apr 3, 2020

Owning land instill a feeling of ownership and pride. It also brings a lot of happiness along with a sense of joy and achievement for the land owner. Other emotions that also play a key role are a great sense of security and peace of mind.

India is a country where owning a piece of land fulfils life long dreams. Other than the fact that you can build your dream home on this plot of land, it can be used in your times of need as well. These days, a number of lenders offer loan against plot to anyone who owns a piece of land and would like to use it as collateral for securing a loan. A loan against land can be used to construct homes, develop a factory or build commercial business plants on the pledged plot of land. Here are some things you need to know before applying for this product.

1. Eligibility Criteria

Before you make your application with the lender, make sure that you have done the necessary research towards your loan against property eligibility check. Here are some of the general eligibility criteria

For Salaried Individuals:

  • You should be a minimum of 18 years and a maximum age of 60 years
  • You should be a resident of India
  • You should haveaBachelor’s degree
  • You should be employed in a private limited company, partnership firm, MNC, Public limited company, Government or Public Sector Company
  • Your minimum monthly income should be Rs. 40,000 or more

For Self-Employed Individuals and non-professionals:

  • You should be at least 21 years of age at the time of loan application
  • You cannot be more than 65 years of age before the loan matures
  • Your business organization should have been operational for a minimum of 3 years
  • Your business organization should have declared profits for the last two consecutive years

2. Required Documents

Here is a list of documents required for loan against property

  • Application form
  • All your KYC documents including PAN Card, Identity Proof, Address Proof, Ownership Proof

For Salaried Individuals:

  • Last 3 months salary slips
  • Form 16
  • Proof of Employment in case your present employer does not match with your Form 16 information
  • Last 6 months bank statements that reflect any existing EMI repayment and salary

For Self-Employed Individuals and non-professionals:

  • Proof of business continuity by providing any one of these documents - Shop and Establishment Certificate/Tax registrations-VAT/Service tax/GST registrations
  • Proof of firm constitution via submission or either of these documents - MOA/AOA/Partnership Deed/GST Registration Certificate/Form 32 for knowing the latest directors
  • Audited financials for the last 3 years
  • Tax Audit Report for the last 3 years - Form 3CB + 3CD in case of proprietorship and partnerships and Form 3CA + 3CD in case of Companies
  • Latest VAT/GST/Service Tax returns for the current financial year
  • The breakup of all secured and unsecured loans
  • As on date List of Directors and Shareholding Pattern
  • Sanction letters for any existing loans with corresponding statements reflecting EMIs for the last year
  • Business Account Statements for the last 1 year

Also, remember to calculate your eligibility to avail the loan with the help of online loan against land calculators. You can also use Fullerton India’s free online Loan against Property Calculator for this purpose.

Must Read: Secured Loan vs. Unsecured Loan

3. Benefits

A Land mortgage loan can be used to build a house, a factory, a business unit, company expansion, purchase of machinery, debt consolidation or funding any other business related expenses.

4. Tax Benefits

There are tax benefits that you enjoy on the interest component of your EMIs. However, this loan may not help you save on your income tax. To know more however, please have a detailed discussion with your lender. You are also advised to read the terms and conditions of the loan document thoroughly.

5. Does Fullerton India offer this Product?

At the moment, at Fullerton India, we only offer loans against commercial or residential property and a plot cannot be pledged to secure a loan. To know more about Fullerton India’s Loan against Property, please click here.

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