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Loan Against Property

There are certain circumstances in our life that bring some unexpected expenses, which we are not prepared for. Some of these include various personal expenditure including higher education, marriage, business travel, medical emergencies or any other unforeseen expenses. At times like these, you can unlock the hidden potential of your real estate assets by availing an easy loan against your commercial or residential property. Although loans as a whole can be quite confusing for the uninitiated, but a loan against property is one of the simpler products of banking.

It is exactly what its name implies, viz., a secured loan that can be availed by keeping a property as collateral against the amount being lent. Banks and financial institutions offer this loan against residential or commercial property, or even a piece of land. Union Bank of India is one of the leading and largest government owned banks in the country. All its bank branches have been networked with its nearly 7,000 ATMs as of 30th September 2015. The bank has recently launched many new services and product for its customers. Its online telebanking facility is available to all of its core banking customers, individuals as well as corporate.

The Union Bank of India offers Loan against Property called Union Mortgage to individuals do that they can meet any sort of financial expenses both private and commercial in nature.

Union Mortgage

A property loan from Union Bank of India which is offered against any type of property that the applicant has and which can be mortgaged to avail a loan from Union Bank of India. The loan against property has the following features:
 

  • The minimum amount of loan which is granted under this head is Rs.5 lakh and the maximum amount depends on the category of the individual who is borrowing the loan. For Non-Resident Indians, the maximum limit of amount granted as loan is Rs. 5 crore, for resident individuals the amount is Rs. 10 crore while individuals involved in agricultural activities can avail a maximum of Rs. 1 crore as a loan against property.
  • The bank would keep a margin and not the total value of the mortgaged property is offered as a property loan from Union Bank of India. The margin required by the bank is equivalent to 50% of the property’s market value as per evaluation which has been mortgaged. The fair market value of the property should be determined by a valuer approved by the bank and such valuation should not be more than 6 months old. During the term of the loan, a fresh valuation would be required once in every three years and the corresponding cost of such a valuation would have to be borne by the borrower who has availed the Union Bank of India property loan.
  • Individuals earning a salary can only avail the loan in the mature of a term loan. Non-salaried individuals have the facility to avail of either a term loan or a secured overdraft as per their choice.
  • The loan from Union Bank of India is offered at a floating rate of interest which does not remain constant throughout the repayment period of the loan.
  • 0.50% of the amount of loan granted is charged as a processing fee for the loan against property in Union Bank of India.
  • Prepayment is allowed without any charges if the borrower manages to prepay the loan from own source of income.
  • There is no repayment holiday or moratorium period in this type of loan. The loan has to be repaid through monthly instalments determined by the bank and the maximum tenure of such repayment is 12 years.
  • In case the loan is transferred to another bank or financial institution or the borrower adjusts it against lump sum from any third party, the borrower would have to pay a penalty which would be 2% of the average balance of the loan over the last 12 months as prepayment charges.
  • The equitable mortgage of the non-agricultural property in the name of the borrower would be required as a security whether the property is residential or commercial in nature.
  • Leasehold properties which are on lease from an Urban Development Authority like the DDA, HUDA, HUDCO, LDA, etc. can be mortgaged as security provided the necessary permission, NOC or tripartite agreement which is necessary for mortgaging the property is obtained from the development authority.
  • If the property has co-owners, they should join as co-applicants for the property loan from Union Bank of India.
  • If the individual is a resident Indian, there is no requirement of a guarantee from any third party. However, this guarantee becomes mandatory if the borrower is a NRI and the guarantee should come from someone who is a local residing in India
  • The property which is sought to be mortgaged should be insured up to its full value and all risks with the bank clause should be covered
  • You can apply for loan against property from Union Bank of India by visiting the banks official website or one the nearest bank branches.

Eligibility Criteria

An individual can avail of the Union Mortgage Loan if the following criteria of eligibility are fulfilled:
 

  • Indian nationals who own a non-agricultural property in their name engaged in personal, business or industrial use can apply for the loan.
  • The age of the individual should be at least 18 years at the time of application and the maximum allowable age limit is 70 years.
  • The applicant and any co-applicant should be filing an Income Tax Return.
  • The loan can be taken by the individual singly or jointly along with his family members who should act as a co-applicant and have a regular source of income. The family members who are allowed to apply as co-applicants include the individual’s spouse, father, mother, unmarried daughter and son.
  • If the property has more than one owner, all the owners are required to join in as the co-applicant for availing the loan against property.
  • Siblings like brother-brother, brother-sister or sister-sister can also act as co-applicants or applicants if the property is in joint name of the siblings.
  • Partnership firms and proprietary concerns who own a residential, commercial or industrial property can apply for the loan.
  • Non-Resident Indians can also apply for the mortgage loan from Union Bank of India.

Loan liability, Interest Rate and Processing Charges

Any individual who wishes to opt for a loan against property scheme from Union Bank of India can choose between two types of interest rates. The rates may vary according to the duration of the loan.
 

  • Fixed interest rate: The interest rate will remain fixed throughout the loan period. It may vary from one banking institution to other, but the general rate lies between 11 and 15% per annum
  • Adjustable / floating interest rate: In this case, the interest rate is not fixed and stagnant, it varies according to rampant market conditions. This could be beneficial for those who wish to keep a loan for short duration
  • The rate of interest charged on Union Bank of India property loan is MCLR+ 2.90%
  • Processing charges are 0.50% of the loan amount
  • Valuation / stamp duty / legal / CERSAI / memorandum registration charges as per the actual

Margin

  • 50% of the fair market value of the property mortgaged as per the latest valuation report. The valuation report should be from an approved valuer of the bank and not older than six months at the time of sanction
  • Fresh valuation of the cost of the borrower is required once in three years during the tenure of the loan.

Documentation Required for Syndicate Bank LAP

The following documents would be required to be submitted by applicants who wish to avail of the Union Mortgage Loan:
 

  • A government issued proof of Identity
  • A proof of address
  • PAN Card
  • Bank Statement of the Last 12 months is required to be produced for availing loan against property
  • A proof of income which varies according to the class of the individual. For salaried class applicants, acceptable income proof documents include previous year’s Form 16, Income Tax Return or Letter from Employer along with last 6 months’ Salary Slips. For non-salaried applicants, the proof of income would be the last 3 years’ Income Tax Return and the Profit and Loss Account along with Balance Sheet of the business.
  • The Title Deed of the property showing the ownership
  • Photographs for application
  • Proof of payouts that can include loan repayment statement, if applicable, an LIC policy of the applicant or other valid proof accepted by the bank.
  • Any other documents as specified in the loan application form.

Nature of the Facility

  • For non-salaried people, term loan and overdraft facilities are available
  • For salaried people, term loan facility is available

Repayment

  • Maximum repayment period of 12 years: applicants has to repay the loan through EMIs
  • No moratorium is permitted

Security

  • Properties on lease hold can be considered as security. The lease should be from urban development authorities such as DDA, HUDA, HUDCO, LDA, etc. subject to necessary permission, no objection certificate, and tripartite agreement as applicable for the creation of mortgages is obtained from the respective development authority
  • Equitable mortgage of non-agricultural property, whether residential or commercial, which is in the name of the borrower
  • Open plots and barren land which are well demarcated and have been acquired by the borrower from urban development authorities such DDA, HUDA, LDA, HUDCO, etc. can also be considered as security
  • All the co-owners of the property need to join as co-applicants while availing an Union Bank of India property loan

Guarantee

Third party guarantee is not compulsory for residents of Indian availing loan against property. In case of NRIs guarantee of a local resident Indian required.

Insurance

Property should be comprehensively insured for an amount not less than value of the property, covering all risks with the bank clause.

Loan Against Property EMI Calculator

Union Bank of India loan against property EMI calculator available on the website helps in calculating the EMI on property loan which you are required to pay each month. For this purpose, one has to put in the needed principal amount, tenure (in years) and acceptable interest rate in the calculator. Once everything is added in the calculator, it shows the approximate monthly EMI on the property loan from Union Bank of India. This tool is designed specially to bring accuracy in the calculation of break up loan amount and the loan repayment process.

Other Products Offered by the Bank Similar to Loan Against Property

  1. Union Reverse Mortgage: The main purpose of lending this loan is to provide a source of income for senior citizens in the form of monthly payout or combination of monthly payout and lump sum (available for medical purpose) amount.
     
  2. Eligibility: the following individuals are eligible for a loan against property:
     
    • Indian citizen above 60 year of age
    • Own self acquired and self occupied residential property in India
    • Individual either singly and jointly with spouse , in case of a living spouse older than 55 years as co-applicant, number of surviving spouse on the date of the sanction should not be more than one
       
  3. Residential property:
  • The property against which borrower purposes to raise the loan should be his / her permanent resident.
  • The property should be self acquired and self owned.
  • Borrowers will be required to inform the bank when they cease to use the residence as their permanent residence.
  1. Tenure of reverse mortgage loan from Union Bank of India:
  • Minimum tenure of 15 years and maximum tenure of up to 20 years, if the borrower age is between 60 and 65.
  • Minimum tenure of 10 year and maximum tenure of 20 years, if the borrower age is above 65.
  1. Quantum of finance:
  • Minimum Rs. 1 lakh inclusive of interest.
  • Maximum up to Rs. 100 lakh inclusive of interest subject to maximum 90% of the market value of the property depending upon the location.
  1. Prepayment penalty:
  • There is no prepayment penalty if the loan is adjusted by the borrower from his / her own verifiable legitimate sources.
  • A forfeiture of 2% on the average balance of the preceding 12 months, if the loan is taken by any other bank / FI or adjusted by the borrower in the lump sum from any third source party (except any genuine sale).
  1. Security:
  • Impartial mortgage of the commercial and residential property, which is in the name of the applicant and his / her family member. The co-owners of the property need to join in as co-borrowers for the Union Bank of India loan.