Demand for credit in India is set to rise with an increase in loan against property by 73 basis points year-on-year, setting at 3.03% in September 2018. LAP held more than 1.6 million accounts and its demand increased by 33% in the last year.<\/p>\n

The property loan market continues to rise with the number of accounts increasing every year. However, many borrowers still hold several misconceptions and myths\u00a0about these types of credit that often prevents them benefitting fully from the features of these credits.<\/p>\n

Let\u2019s take a look at some of the misconceptions on mortgage loans:<\/p>\n

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• <\/b>You <\/b><\/strong>R<\/b><\/strong>equire <\/b><\/strong>H<\/b><\/strong>igher <\/b><\/strong>I<\/b><\/strong>ncome <\/b><\/strong><\/li>\n<\/ul>\n

  While you apply for an advance, your lender will evaluate your creditworthiness under specific parameters, such as credit score and income. You are required to hold a CIBIL score of 750 of higher with a stable source of income. As loan against property involves higher security than compared to collateral-free advances, you can avail such secured loans with a comparatively\u00a0lower\u00a0credit score and income in some cases. However, credit score and income are not the \u00a0requirements\u00a0while you avail advances; you are required to meet\u00a0other significant parameters of the eligibility criteria.<\/p>\n

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  • <\/b>Advances <\/b><\/strong>C<\/b><\/strong>an <\/b><\/strong>B<\/b><\/strong>e <\/b><\/strong>A<\/b><\/strong>vailed <\/b><\/strong>O<\/b><\/strong>nly <\/b><\/strong>A<\/b><\/strong>gainst <\/b><\/strong>R<\/b><\/strong>esidential <\/b><\/strong>P<\/b><\/strong>roperty<\/b><\/strong><\/li>\n<\/ul>\n

    The term loan against property states that you can avail credit against collateral as a security. Some of the types of loans against property you should know about\u00a0are disbursed against both residential and\u00a0commercial property. The ownership of the property that you are to mortgage should lie with you. In case you mortgage a residential property you can make use of the property throughout the loan tenor. The ownership of the property will only get transferred to your lender if you default on a payment.<\/p>\n

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    • <\/b>The <\/b><\/strong>L<\/b><\/strong>oan <\/b><\/strong>A<\/b><\/strong>mount <\/b><\/strong>I<\/b><\/strong>s <\/b><\/strong>E<\/b><\/strong>qual <\/b><\/strong>T<\/b><\/strong>o <\/b><\/strong>T<\/b><\/strong>he <\/b><\/strong>V<\/b><\/strong>alue <\/b><\/strong>O<\/b><\/strong>f <\/b><\/strong>Y<\/b><\/strong>our <\/b><\/strong>P<\/b><\/strong>roperty<\/b><\/strong><\/li>\n<\/ul>\n

      Lenders do not provide a loan amount equal to the value of your property. Only 70% to 90% of the value can be availed while applying for a property loan<\/u><\/a>. Hence, it is essential that you analyse the market value of your property before opting for a secured credit against property. Other aspects that help in deciding the loan value is the age of the property, location, current condition of your property, etc.<\/p>\n

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      • <\/b>The <\/b><\/strong>L<\/b><\/strong>ender <\/b><\/strong>Gets Possession<\/b><\/strong><\/b>O<\/b><\/strong>f <\/b><\/strong>Y<\/b><\/strong>our <\/b><\/strong>P<\/b><\/strong>roperty <\/b><\/strong>W<\/b><\/strong>hen <\/b><\/strong>Y<\/b><\/strong>ou <\/b><\/strong>M<\/b><\/strong>ortgage <\/b><\/strong><\/li>\n<\/ul>\n

        The ownership of your property lies with you while you avail loan against property, provided you pay your EMIs on time. The ownership gets transferred, or your lender has the possession of your property only if you default on payments.<\/p>