State Bank of India is the largest public sector bank in our country with over 16,000 branches all over the nation, higher than any other bank in India. State Bank of India provides a range of banking services and products in India and overseas. One of its prominent offerings is its loan segment. The bank offers an assortment of loans for its customers. SBI offers a loan against property scheme for cash requirements against the individual’s asset (or property). This loan from SBI is a complete protection plan for your family and their future.
Loan against property can also be called an all-purpose loan to counter anything that life throws your way. If you are in cash crunch you can leverage a property and avail this loan to take care of your needs. You have repay the bank in Equated Monthly Instalments i.e. EMIs at an interest rate pre-decided by the bank.
Loan against Mortgage of Immovable property – The loan is issued against mortgage of properties which are immovable in nature. The features of the loan offered are as follows:
- It is a loan issued for general purpose use and should not be utilized for speculative purposes either in the real estate market or on the capital market
- The ratio of Equated Monthly Instalment and the Net Monthly Income should not exceed more than 50%
- The minimum amount of loan granted under this type of scheme is Rs. 25,000
- The maximum amount of the loan is 60% of the market value of the mortgaged property keeping in mind that the Equated Monthly Instalment Ratio to the Net Monthly Income does not exceed 50%.
- Moreover, there is also a limit on the maximum amount of loan granted based on the city from where the loan is availed. The limit is Rs. 2 crores for Tier I and Tier II cities, Rs. 1 crore from the Rest of India and Rs. 50 lakh for the states of Orissa, West Bengal, Meghalaya, Mizoram, Arunachal Pradesh, Assam, Tripura, Manipur and Nagaland excluding the cities mentioned in Tier I and Tier II list.
- The repayment period is a maximum of 120 months, which means 10 years or the retirement date whichever is earlier
- The repayment period for cases without check-off is 72 months or 6 years but the sanctioning authority may permit the period to extend to 84 months or 7 years. In cases where check-off is not available, ECS mandate or Post-Dated Cheques should be obtained to guarantee repayment
- It is type of a term loan with the processing fee equal to 1.01% of the outstanding amount of loan to a maximum of Rs.50, 933 including the applicable service Tax
- The customer can pre-pay the loan anytime whenever he has surplus cash without worrying about any pre-payment charges. The bank does not charge any charges on pre-payment of the loan.
You can pay the EMI on property loan according to your own convenience as there is no hard and fast rule laid down by the bank. The bank calculates the EMI based on the standard loan against property EMI calculator. You can use the resources on the web to find such a calculator for yourself and assess the different factors such as tenure, interest rate, etc. to look at the various EMI options you can pay back.
Rent Plus – The rent plus loan against property from SBI provides assignment of future rents to the commercial and residential property owners so that they can meet their monetary requirements. The features of the loan are as follows:
- The amount of loan available under the scheme is calculated as the lowest of the realizable value of the mortgaged property as per the valuation report of the bank’s approved value or the maximum permissible amount of the scheme or 75% of the total rent receivable for the lower of the residual lease period or the loan period less the advance deposit, estimated amount of property tax, service tax, TDS and other statutory dues of the period.
- The minimum amount of loan permissible under the scheme is Rs.50, 000 and the maximum amount is Rs. 7.5 crores for metro cities and Rs. 5 crores for non-metro cities
- The margin reserved by the State Bank of India is 25% of the loan amount
- The repayment period is a maximum of 10 years or the residual period of lease of the property whichever is lower. The customer can choose any period of repayment within this specified limit which will also determine the EMI amount payable by him. If the customer wishes to avail a lower EMI, the tenure chosen should be higher and if the customer can afford to make higher EMI payments, the tenure can be chosen to be lower.
- Repayment of the EMI can be made either through Post-dated cheques drawn against the applicant’s bank account or through Electronic Clearing System (ECS) facility or by issuing a Standing Instruction (SI) to the bank to deduct the applicable EMIs as and when they fall due from the applicant’s savings or current account. However, the Standing Instruction facility is available only to those customers who have an existing bank account with SBI
- The processing fee is 2.02% of the loan amount to a maximum of Rs.101, 865 including the applicable service tax. The processing fee has to be paid upfront and is to be borne by the borrower
- There are no pre-payment charges and the customer can make pre-payments against this SBI property loan to reduce the incidence of interest charged on the outstanding balance of the loan amount
Eligibility of Loan against Mortgage of Immovable property
The individuals who meet the following criteria are eligible for loan against property from the State Bank of India:
- This loan from SBI is available to employees, professionals, self-employed individuals, individuals who are IT Assesses or agriculturists and others engaged in allied activities having an urban property in his or her name or in the name of any third party provided the third party agrees to guarantee the loan
- The minimum Net Monthly Income for salaried employees should be Rs. 25,000 and for others, the minimum Net Annual Income should be Rs. 3 lakh
- The applicant should not be aged more than 60 years.
Eligibility of Rent Plus
- This loan from SBI is available to owners of residential buildings and commercial properties which are to be rented or are already rented to Multi-national Corporations, Banks or large and medium sized corporates.
- The property should be located in urban, metro, semi-urban or rural area
- Plan approvals and other related permissions for the property should be available from appropriate authorities
- The property should be rented or are to be rented to Multi-national Corporations, Banks or large and medium-sized corporates and the Network GM is vested with the authority to consider cases of other types of lessees
- The property should not be or had been leased to schools, colleges, hospitals, orphanages, nursing homes, old age homes, or any other social sector infrastructure
Interest Rates: The tables below represent the loan liability and interest rates:
INTEREST RATE OF LOAN AGAINST PROPERTY MORTGAGE OF IMMOVABLE PROPERTY
Rate of Interest
Loans up to rs.1 crore
2.10% above the Base Rate i.e. 11.70% per annum
Loans above Rs.1 crore
2.60% above the Base Rate i.e. 12.85% per annum
The Base Rate is 9.70% per annum
INTEREST RATE OF RENT PLUS
Rate of Interest
Loans up to Rs. 7.5 crore in metro cities and Rs. 5 crores in non-metro cities
3.25% above the Base Rate i.e. 12.95% per annum
In all other cases of deviation
3.40% above the Base Rate i.e. 13.10% per annum
The current Base Rate is 9.00% per annum.
The main reason for which people do not want to opt for this loan is because they do not want the bank to take custody of their property. Another reason is that there is no tax advantage given while paying the EMI on mortgage loan as compared to a home loan. However, this is only in the case of a salaried person. A business person can claim a tax deduction on the entire amount paid on the loan if he or she can prove that loan was taken to improve the business. The tax incentive is also available for a loan against any kind of securities such as gold, any other that he / she possesses. However, if you need a large amount of money that runs into crores or lakhs, the only feasible assets that you may be able to as security is property which belongs to you.
A property loan from SBI is popular when it comes to any monetary needs. However, as the loan requires a mortgage of your property, it may be convenient if you take a personal loan if your need is small. People often take a loan against property to take care of the cost of education of their children or to build or buy a second property for commercial or personal needs.
This is the best loan, when you are in urgent need of cash for your business as the interest rates are lower than a business loan. It is advised to take a loan against property only after doing a thorough research of the finances so that you would be able to repay the loan within the loan tenure.
An individual can apply for an SBI property loan in various ways. One of the most convenient ways is by simply visiting Paisabazaar website and following the below steps:
To cash in on the online advantage which reduces hassles and is easier, the bank offers Home Loan application online through its website. The process is simple if you want to apply for a SBI loan against property from:
- Visit the Paisabazaar website and log in to the loan against property online application page
- Provide your personal details and loan requirements
- Select the loan scheme based on your requirements
- Submit the scanned copies of your documents online
- Select a loan scheme as per your requirement
- Click ‘Apply’
**For any assistance you may call at our customer service number. Our customer service agents will also call you within 24 hours of submitting the online application form.
Q. What are the maximum and minimum amounts that you can avail as a loan from SBI against your property?
A. You can avail a property loan ranging from Rs. 5 lakh to Rs. 5 crore depending on the value of your property against which you want to avail the mortgage loan. The assessment of the property is done by SBI before the loan is disbursed.
Q. What is the repayments option available and how long can it be repaid?
A. You can repay the loan through electronic clearance system, more popularly known as ECS, by instructing State Bank of India to deduct monthly instalments from the given bank account. Alternatively, you may repay the loan amount through post-dated cheques by using various financing schemes.
Q. What type of property can be used as collateral to avail this loan?
A. Self-occupied residential property, commercial properties such as offices and shops and alternate property such as schools, hospitals, residential houses, industrial properties, and all such other properties can be used as collateral for availing a loan against property.
Q. How does bank determine who is eligible for availing a loan against property?
A. The following factors are considered to determine loan amount and eligibility for availing a loan:
- Valuation of property (fair market value)
- Stability / continuity of employment of employment or business
Past borrowing track record
Q. What is the disbursement and sanctioning process of property loan and how long does it take finally for a loan to get processed?
A. Property loan involves following disbursement and documentation process:
- Filling the application form
- Deciding on the loan amount
- Submission of property and finance related documents
- Personal discussion with the banker
- Investigation verification
- Sanctioning of the loan by the bank
- Acceptance of the loan by you
- Legal / property assessment
- Disbursement of loan
Q. What are the tax incentives for a loan against property?
A. There are no tax incentives for a loan against property for salaried individuals. Under the Indian Income Tax Act, 1961, tax exemptions are available under Chapter VI and section 24 for a home loan. However, the same exemptions are not available for a loan against property. The reason for this is that unlike a home loan that you take for building a house, a loan against property can be used for a variety of reasons.
Therefore, it is better to take a loan against property for business reasons. You can show that the loan has been used for capital expenses and show the repayment as business expenses.
Q. Should I take a loan against property or a personal loan from SBI to meet personal expenses?
A. A loan against property is a form of secured loan while a personal loan is an unsecured loan. State Bank of India has different terms and conditions for each loan. Experts suggest that a personal loan may be a good idea if you need a small amount that you can pay off within 2-3 years. Alternatively, a loan against property is what you need if you are looking for a substantial sum. Since mortgage loans come at a lower rate of interest, the EMIs are low, and so the outgo for the same sum of money for the same repayment period is considerably less for an SBI loan against property as compared to a home loan.