The Loan against Property scheme offered by the Corporation Bank is called as the Corp Mortgage Scheme and is available to individuals and non-individuals who have a property and want to avail finance against the value of the property. Let us discuss the loan in details:
Eligibility Criteria for Corporation Bank Loan against Property
The following can apply for the loan with the specified criteria:
- Individuals who are income tax assesses in the age group of 18 years to 65 years can apply for the loan
- Non-Residential Indians, Partnership Firms, companies, HUFs and trusts can also apply for the loan
- The above individuals and non-individuals can only apply for the loan if they have a residential, industrial or a commercial property in their name which they have to mortgage with the bank
- As the loan is dependent on the repayment capacity of the borrower/s, a maximum of two close relatives can act as co-applicants to supplement the repayment capacity criteria
- In case of non-individual applicants like firms, trusts, companies and HUFs, the partners of the firm, trustees of the rusts, directors of the companies and co-parceners of the HUFs can act as co-applicants for supplementing the repayment capacity if they have an independent and steady source of income.
- Loan cannot be availed against the mortgage of any third-party property which is any property owned by a friend or a non-relative
- The salaried individuals applying for the loan should have a net monthly income of at least Rs.20, 000 while non-salaried individuals should have an annual income of at least Rs.2.5 lakhs
- If the borrowers are not salaried, cash accruals or depreciation may also be added to their income for gauging their repayment capacity.
Features for Corporation Bank Loan against Property
The loan has the following features of importance:
- The loan against property can be used for any personal or business use without any hassles
- The maximum amount of loan allowed is 10 times of the net annual income provided the computed figure falls within the scope of the minimum and the maximum quantum of loan as fixed by the bank. The minimum amount of loan as fixed is Rs.2 lakhs and the maximum amount is Rs.500 lakhs based on the area in which the property is situated.
- 50% of the value of the property would be maintained as margin and the remaining 50% would be sanctioned as the loan amount
- The property against which the loan is taken should be mortgaged with the bank and the property should not be more than 20 years old. A third party guarantee is not mandatory and depends on the bank’s review.
- A processing fee is required to be paid under the loan which depends on the nature of the loan taken Rs. 500/- irrespective of loan amount . If a term loan is taken, 1% of the amount of loan sanctioned would be payable as the processing fee. If a running account is maintained under the loan, 0.50% of the loan amount sanctioned would be charged as the processing fee which should be collected on renewal every year
- The loan can be prepaid at will of the borrower without incurring any prepayment charges
- If the loan is taken as a term loan, it should be repaid within 7 years to 10 years. If a running account is taken by a non-salaried class individual, it is repayable on demand of the bank subject to an annual review.
- The EMI or notional interest of all existing and proposed loans should not increase beyond 50% to 70% of the borrower’s net income
- The repayment cannot exceed the retirement age of the salaried class individual. If the borrower is a non-salaried class individual, the repayment should be completed before the individual reaches 70 years of age
Individuals and non-individuals are charged an interest rate of Base Rate + 4.35% on their loans against property. Since the Base Rate is 9.65%, the equivalent rate of interest becomes 14% per annum. MSME borrowers are charged a lower rate of interest of 12%, i.e. Base Rate + 2.35% per annum.