If you have a residential property or commercial which you have give on rent and you want to renovate to make the best of rental prospects. In this situation, if you do not pay enough money to do so, then you need to hire. Thus, you can avail a loan for the renovation of your residential or commercial property on an upcoming rent basis. Such a loan is cheaper as compared to a personal loan.
Nowadays most of the banks in the market only approve loans against commercial properties, but there are also some banks located in the market that approve loans for residential properties only. Here, we have mentioned the important factors that you should know before taking a loan against rentals.
Important Steps Before Taking A Loan Against Rentals
Eligibility for Loan against Rentals
- There should be a property that has good scope for future rental income.
- You should always ensure that the following conditions and conditions are met before taking a loan against rent.
- You should have a property that has good scope for future rental income.
- You should have such property against which the loan can be taken, it has been made according to the scheme approved by the municipal authorities.
- You must have repayment capacity and sound financials.
- The rental agreement between you and the tenant is confirmed and only up to the mark.
Required Documents for the loan
If you meet all of the above eligibility, to take out your loan against the rent, you need to submit the documents given below.
- A loan application duly filled in as per conditions
- Recent photos which should be passport size
- Copies of your ID proof like Voter ID, Passport, PAN Card and Aadhaar Card
- Copies of your residence proof such as Aadhar card, passport, water or telephone bill and current electricity bill
- Copies of salary slip, proof of income or applicable business
- PAN card copies
- Last three years of income tax return
- Rent contract
- All property-related documents such as ownership deeds, property tax receipts, registries, and approval of the plan by the municipality
- Confirmation receipt of processing fee from the bank
Features
The features of loan against rentals are as follows.
Repayment Tenure
According to the terms of the bank and your credit repayment, the repayment period can be from ten to fifteen years.
Rate of interest (ROI)
However, it is a very secured loan and the interest rate (ROI) is lower than any personal loan. Generally, banks and other financial companies charge interest rates within the base interest rate + 2.5 – 3.85% according to the interest and repayment capacity.
Loan Amount
Typically, the loan amount can be more than 70% to 90% of the present market value of the property.