Vijaya Bank, one of the leading public sector banks in India, offers V-Mortgage, a loan against property scheme which allows customers to borrow money by mortgaging their property with the bank for meeting financial requirements. In the following sections, we will discuss the key features of the V-Mortgage scheme from Vijaya Bank.
- The amount of loan which is availed can be used for personal purposes, business purposes or for any other general purposes as required except for speculative purposes which are prohibited
- The amount of loan which the bank would grant depends on 2 factors. One is the monthly income of the borrower and the other is the value of property mortgaged against which the loan is sought.
- The amount of property loan from Vijaya Bank given would be equivalent to 48 month’s gross monthly income of the individual and 70% of the value of the property should be offered as security despite its value being higher than the quantum of loan granted.
- The maximum allowable limit of a V-Mortgage loan is Rs. 5 crore.
- For repaying back the loan taken, the bank gives a maximum repayment period of 10 years or 120 months.
- The loan would involve a processing charge which would range from 0.15% to 0.55% of the amount of loan sanctioned.
- Any non-agricultural or non-industrial property would only be accepted as security against the loan taken.
- The nature of a loan against property is a term loan.
- Any individual who is a salaried employee/professional, self-employed professional or a businessman can take a property loan from Vijaya Bank. Non-individuals who are eligible for a loan against property include proprietorship firms, limited liability partnerships and companies.
- The age limit for individuals seeking a loan from Vijaya Bank is 21 years to 65 years.
The rate of interest which is charged on the V-Mortgage loan is linked to the base rate and is floating in nature. The current rate of interest is 12.15% per annum (Marginal Cost of Funds Based Lending Rate for 1 year which is 9.45% plus 2.70%).
The borrower is liable to pay all EMIs on time, failing which he/ she will be penalized at the rate of 2% per annum on the amount overdue for the delayed period of repayment. A default will result in legal action by the bank for unpaid dues and eventually lead to the transfer of mortgaged property to the bank i.e. the bank will become the owner of the property. The borrower will lose his/ her right to the property and become ineligible for loans from banks and financial institutions. The default will feature in the borrower’s CIBIL report lowering his/ her credit score.
The bank provides applicants with the facility of computing their Equated Monthly Instalments (EMIs) before hand when they want to apply for a loan against property. This can help them to ascertain the instalment payable which can be used to ascertain the loan’s affordability. The EMI calculator option is available both on the home page of the bank’s website and on the web page which details all loan products offered by the bank. For instance, the following 3 cases of loans are presented with their corresponding instalments calculated using the loan against property EMI calculator:
- If an individual avails a property loan from Vijaya Bank of Rs. 20 lakh against his/ her property at the applicable interest rate of 12.15% and decides to pay off the loan in 5 years through 6 instalments, the instalment payable would be Rs. 44,640
- If the loan had been taken for Rs. 50 lakh at the same rate of interest, the EMI on property loan would have come to Rs. 88,665 payable in 7 years
- If the tenure chosen would have been the maximum tenure of 10 years and the amount of loan from Vijaya Bank would have been Rs. 70 lakh, the instalment would be Rs. 1,01,308
Though the loan application can be done online, the bank also provides the option of branch application and connecting with the bank through the bank’s toll-free helpline number. By calling in, the customer can call and talk to the bank’s executive to solve any queries he/ she might have and enquire for the application of his/ her Vijaya Bank property loan.
Application of a loan does not grant the loan immediately. The bank takes time to analyze the application form to ascertain the applicant’s income, creditworthiness, repayment capacity, documents and the quantum of loan to be granted. Meanwhile, if the customer wants to know of his/ her loan application status, he/ she can simply check it on the bank’s website by following some basic steps. He/ she would first have to go to the website and click on the ‘Apply Online’ tab. There will be 3 options on the page – the last 2 pertain to the status of the application. One option shows the status of the application made through the branch, while the other shows the status of the application made online. By selecting the respective option, furnishing the application number and any other details asked for, the customer can check the status of the Vijaya Bank property loan application he/ she made with the bank.
Q. What is a loan against property?
Ans. A loan against property is a unique product which allows one to leverage own residential as well as commercial property to raise funds without selling it. The property is mortgaged and the bank gives a loan up to a certain percentage of the property's market value. This value ranges from 40 to 70 percent from bank to bank.
A loan against property is a secured loan as the borrower gives a guarantee to the bank by offering his/ her property as security. Since it belongs to the secured loan category, the rate of interest is lower as compared to a personal loan and the tenure long. A loan against property offers higher loan amounts. The quantum of finance usually depends on the market value of the property to be mortgaged and the borrower’s ability to repay the loan.
The loan can be used for legitimate purposes which are not speculative in nature. Common uses of a loan against property include:
- Expansion of business
- Education of the child
- Consolidation of debt
- Medical treatment
- Meeting marriage expenses
- Purchase of another property
A loan against property is an effective tool to sail through bad times when one is facing a financial crisis. Such a loan can be secured with minimum risk in a short period of time by submitting property documents with the bank.
Q. Who all can apply for a loan against property?
Ans. A loan against property is available to a large section of people and entities. Salaried individuals, professionals, self-employed professionals, businessmen, etc. can apply for such a loan, as can non-individuals like proprietary concerns, partnership firms, limited liability partnerships and companies.
Q. Is a proprietor, partner or director owned property considered an acceptable security for a Vijaya Bank property loan?
Ans. Yes, a property owned by a proprietor, partner or director is accepted as security provided he/ she becomes a co-applicant in the loan approved for a proprietorship firm, partnership firm, limited liability partnership or a company.
Q. What are the entry and exit age requirements for a property loan from Vijaya Bank?
Ans. The minimum entry age of a salaried borrower for a Vijaya Bank property loan is 21 years and the maximum exit age is 65 years. In the case of pensioners, the maximum exit age is higher at 75 years.
Q. What is the range of finance available to a customer for a loan against property in Vijaya Bank?
Ans. The minimum amount of a property loan from Vijaya Bank is Rs. 5 lakh and the maximum amount that can be sanctioned is Rs. 5 crore.
Q. What are the income requirements for assessing a property loan from Vijaya Bank?
Ans. A loan against property from Vijaya Bank requires the borrower to have a yearly income of at least Rs. 3 lakh. He/ she should have sufficient cash flow to pay the instalments. The basis of fixing repayments is the net annual earnings of the borrower. He/ she will have to submit proof of income/ salary certificate/ income tax assessment order, etc.
Q. Does Vijaya Bank allow the clubbing of another person’s income for the purpose of loan assessment?
Ans. Yes, the bank permits the income of the spouse and adult children to be clubbed for assessment of a loan against property, provided these individuals are income tax assesses. In such a case, they will have to join in the execution of documents i.e. they must be co-signors of the loan.
Q. What are the factors which decide the quantum of loan against property from Vijaya Bank?
Ans. The quantum of finance in case of a loan against property is arrived at on the basis of the lowest value of the following 3 criteria:
- 70% of the market value of the property (as per the valuation report) to be offered as security i.e. a 30% margin on its market value
- Salaried individuals: 48 months average gross salary of immediately preceding 24 months
Non-salaried individuals: 48 times the average monthly income of immediately preceding 24 months
On the basis of the net take home salary/ income of the applicant after servicing existing and proposed loans
- Salary/ income up to Rs. 20 lakh: 40%
- Salary/ income above Rs. 20 lakh up to Rs. 50 lakh: 30%
- Salary/ income above Rs. 50 lakh: 20%
Q. What is the repayment tenure offered for a Vijaya Bank property loan?
Ans. A maximum period of 120 months or 10 years is given to repay a loan against property.
Q. What is accepted as security for a loan against property from Vijaya Bank?
Ans. Non-agricultural and non-industrial, tenant-free commercial as well as residential property, having a clear marketable title is considered as acceptable security by Vijaya Bank for a loan against property. Also, property in the name of the close relatives of the borrower is accepted, provided owner(s) of such property also join as co-borrower(s)/ guarantor(s) of the loan.
Q. Is vacant land an acceptable form of security for a loan against property from Vijaya Bank?
Ans. Only that vacant land is considered for the purpose of security which is a residential site or plot allotted by a statutory development body like DDA, BDA, MUDA, etc. Another condition is that such a plot should be in the name of the first time allottee.
Q. Is a guarantee required for a loan against property from Vijaya Bank?
Ans. Yes, a guarantee of another person who has adequate net worth is required for a Vijaya Bank property loan. If a loan is sanctioned to a proprietorship firm, partnership firm, limited liability partnership or a company, then the proprietor, partner(s) and director(s) have to give a personal guarantee.
Q. Will a property owned by another person accepted for a loan against property from Vijaya Bank?
Ans. The applicant for a Vijaya Bank property loan should ideally be the owner of the property to be mortgaged. However, in certain specific cases where the property is owned by very close relatives (as defined in the policy) of the borrower, it is accepted as security. In a scenario like this, such a family member has to become a co-applicant in the loan against property.
Q. What are the charges involved in availing a property loan from Vijaya Bank?
Ans. The applicant has to bear the charges for loan processing, inspection, property valuation, CERSAI, CIBIL, legal scrutiny report from an advocate, insurance premium, etc. while taking a loan against property from Vijaya Bank.
Q. Is any charge levied on pre-payment of a Vijaya Bank property loan?
Ans. No charge is applicable if a loan against property is repaid before the end of the given tenure, provided the loan is sanctioned at a floating rate of interest.
Q. What is the penalty for late payment of an EMI on property loan from Vijaya Bank?
Ans. If there is a delay in payment of an EMI, the bank levies a penal interest at the rate of 2% per annum, over and above the normal interest on the overdue amount for the duration of the delay.