Different types of Loans we offer:

1) Home Loan

​

A Home Loan is finance provided by a bank or a financial institution to enable its customers to purchase or construct or improve their homes. Buying a home could be one of the biggest achievements of a person's life. In most cases, it takes an entire lifespan to fulfill the dream of purchasing one's own home. Selecting the ideal property involves a lot of research and planning and thus, arranging funds is probably the toughest and the trickiest part of the process. You could dip into your savings for the entire payment or decide to get a Home Loan at a good interest rate. A decade or so earlier, borrowing from a bank used to be a cumbersome process but today financial institutions have simplified the entire Home Loan application and disbursement process. All leading financial institutions offer Home Loans with attractive interest rates, flexible repayment periods, quick turnaround times and unique product features. Before finalising on a lender, one must understand the intricacies of a Home Loan.

i. An accomplishment - Every individual dreams of owning a house in their name. A home loan allows you to accomplish this feat and realize your dreams. This is one of the biggest financial investments you make in your lifetime and can therefore be considered an accomplishment.

ii. Capital appreciation- Land is an appreciating asset in most cases. Construction costs have also increased over the years. As rents get more expensive with inflation, investing in your own house can shield you from inflation.

iii. Benefits in interest rate- In the 90's, banks used to charge up to 18% interest on loans. Today, you are able to get a home loan at 7.65% annually. The decrease in the interest rates coupled with capital appreciation makes it a dual benefit plan.

iv. Tax benefits- The Government of India has played the biggest role in boosting the home loan sector. As per Section 24B of the Income Tax Act 1961, you get a deduction of 2 Lakhs towards repayment of interest towards loans availed for purchase/construction of house (if you or your family is living in the house). At the same time, Section 80CC read with Section 80CCE of the Income Tax Act 1961 allows for a tax deduction up to 1.5 Lakhs on repayment of principal amount of the home loan. This is one of the greatest incentives for people to opt for a home loan, even if you are able to afford to buy your house with your savings.

2) Loan Against Property (LAP)

A Loan against Property is a mortgage loan provided by banks and financial institutions for personal as well as business purposes.A Loan against Property can be availed for a variety of purposes ranging from home renovation to purchase of machinery as well as to meet the shortfall of working capital. It is a safe proposition for the banks because they have collateral of the property as support for the finance they provide. Salaried people opt for mortgage loans to cater to expenses like the educational needs of their children, medical expenses, home renovation, and so on. Business enterprises prefer the Loan against Property as collateral towards Business Loans and for procuring working capital requirements. A Loan against Property is easy to procure because it is secured in nature. Banks usually maintain a margin while sanctioning a Loan against Property. This margin usually ranges from 50-90% of the value of the property (also known as LTV or Loan-to-Value). This facility is also popular because the borrower can utilize the property in spite of mortgaging it in favour of the bank. The difference between a Loan against Property and a Personal Loan is that can take a Personal Loan without providing collateral. However, a Loan against Property requires you to mortgage your property to the lender. Another significant difference is the rate of interest on a Loan against Property is less than the rate of interest on a Personal Loan. It is primarily because of the security available to the bank. Banks have the option of selling the security and recovering their dues in case of default on the part of the borrower.

Different kind of Loan Against Property (LAP)

​

i. Business Expansion Loans - Business entities can avail this facility for acquiring new machinery, purchase of plant, meeting working capital requirements, and invest in new technology or business. The lending banks require collateral in the form of property, residential, commercial, or industrial. Depending on the nature of the property available as collateral, the lending banks calculate the loan eligibility. For commercial properties, the LTV is around 55- 65%. In the case of industrial properties, the LTV reduces to 40-55% whereas the LTV in the case of residential property is in the range of 65-70%.

​

ii. Working Capital Overdraft Facility - Any event/happening that causes the travel plans to get canceled can result in substantial financial losses. This is where the travel insurance policy comes to the rescue. Although, it cannot take away the disappointment of a cancelled trip, it helps evidently.

​

iii.  Personal Expenses - Individuals can also avail Loan against the Property for personal expenses such as medical expenses, educational expenses, marriages, travel, as well as for purchasing consumer durables. 

​

iv. Home Renovation - Usually, people do not avail this loan for renovating homes as there are separate schemes available at comparatively lower rates of interest. However, there can be circumstances when the borrower might have to resort to avail a Loan against Property for home renovation.

​

v. Lease Rental Discounting - Some banks offer loans against the future rent receivables, especially in metropolitan and urban areas. One should note that the property that fetches the rent should also be mortgaged in favour of the bank. Banks usually finance in the range of 75% to 90% of the future lease/rent receivables. The tenure of such loans is shorter and should end before the expiry of the lease or the rental.

​

Features of Loan Against Property (LAP)

​

1. Easy to get - LAP is a secured loan. Banks maintain a margin in the range of 50-90% of the value of the property.

2. Longer tenure - Usually banks sanction a LAP between 3 Lakhs to 100 Crores. It is the only loan facility other than the Housing Loan that allows banks to stipulate repayment periods exceeding 10 years. Banks are willing to sanction loans against property with tenures extending up to 15 years. 3. Lower interest rate - In comparison to Personal Loans, LAPs have a lower rate of interest. The reason is the security offered to the banks.

4. Lower EMI - When you have longer tenure and a lower interest rate than Personal Loans, the EMIs are bound to be lower.

5. Flexibility - Various banks have flexible loan products in this category. They are the term loans and overdraft facilities. You do not have this flexibility with Personal Loans.

6. Tax Benefits - You get benefits on the Income Tax front if you avail a LAP for home renovation purposes. Usually, customers go for home renovation loans if they have to carry out repairs to the same property to be mortgaged to the bank. You might carry out repairs to your home but avail a LAP by mortgaging another property. Under such circumstances, you have to prove that the end use of the loan is for carrying out renovations to the property you reside in.

​

2) Home Loan Balance Transfer

There are several players in the market who are providing Home Loan at competitive rates and unaware of this if you have availed a Home Loan from a lender whose rate of interest is much higher than what is prevailing in the market, you can go for a transfer of the outstanding balance to another bank/financial institution who is offering the loan at a much lower rate. This transfer of the outstanding balance of the existing Home Loan from one bank/financial institution to another is Home Loan Balance Transfer. A Home Loan involves a huge amount and so even a small difference in the interest rate matters. So, if you feel that other lenders are providing the Home Loan at a much lower rate, then it is recommended to go for a Home Loan Balance Transfer. After a few years of availing the Home Loan, you might want to avail a Home Loan top-up for repairs and renovation or extension of your existing house. If your present bank does not provide this facility, you can opt to transfer the balance to another lender who has this facility.

Key features of Home Loan Balance Transfer

​

The Home Loan Balance Transfer involves the transfer of the outstanding balance in the existing Home Loan from the existing to another lender. This transfer involves a few procedures. They are:

i. The take over of the outstanding Home Loan balance from the existing lender is treated as a fresh loan by the new lender. All the requisites like a stable income, good credit score, and KYC verification will be mandatory. A prescribed application for the balance transfer has to be given along with the required documents. The assessment will be done like in the case of a new loan.

​

ii. Scrutiny of property documents and valuation of the property will be done by the new lender once again. The panel advocate and the panel valuer of the new lender will be doing the scrutiny of property documents and the valuation of the property.

​

iii. The transfer of balance will be allowed by the existing lender only after the loan has run for a minimum period as prescribed at the time of providing the facility. Until then, the No Objection Certificate (NOC) will not be issued by the existing lender.

​

iv. The transfer of balance amount to pre-closure as far as the existing lender is concerned. So, pre-closure charges which range from 2% to 4% on the outstanding balance will be collected at the time of transfer. The charges will be included in the outstanding balance and the demand will be made from the new lender to an extent which is inclusive of these charges.

v. The new lender will treat the balance transfer like a fresh loan and hence processing charges will be collected at the prescribed rate, which ranges from 0.5% to 1% of the loan amount.

vi. On transfer of the outstanding balance in the Home Loan from the existing lender to the new lender, the subsequent EMI becomes payable to the new lender.

Home Loan Balance Transfer - Eligibility

​

The following are the eligibility criteria for the Home Loan Balance Transfer:

i. The age of the applicant should be between 21 years to 60 years if salaried and 21 years to 65 years if self-employed or a businessman.

ii. Salaried individual, self-employed individual/professional, and businessmen are eligible for the loan.

iii. The minimum income criteria as per the lender whom you approach for the balance transfer should be complied with.

​

iv. The work experience of a minimum of 2 years with the present employer is required for the salaried individual. The business vintage of 3 years of which at least 2 years of profit-making period is insisted.

v. The Home Loan account should have been conducted satisfactorily with the existing lender and the EMIs paid regularly.

vi. The credit score of the applicant should be above 650. If the credit score at the time of availing the existing Home Loan was as per the required norms and during the few years has declined due to various reasons, the Home Loan balance will not be taken over by the new lender. The credit score at the time of request for balance transfer also should be as per the prescribed norms.

vii. The debt to income ratio of 40% to 50% should be complied with.

​

3) Personal Loan

​

A Personal Loan is an unsecured loan provided by banks and financial institutions to meet personal exigencies. Financial woe scan arise at any time. You may need funds to pay for educational expenses for your children or a wedding in the house. There could also be unexpected medical bills to deal with. Availing a Personal Loan as an additional back-up is something you could consider if you find yourself in a tough spot. Some people take Personal Loans to consolidate their credit card debt. You too can do this and pay off your existing credit card outstanding amount.

​

Advantages of Personal Loan

​

i. No Collateral - This is the most significant advantage of taking a Personal Loan. It is the most convenient option from the customer's point of view. You do not need to mortgage an asset for taking a Personal Loan.

​

ii. No end use requirement -You can avail a Personal Loan for any purpose. There is no compulsion on borrower's part to disclose the use of funds. However, banks do take a declaration that you will not use the loan for speculative purposes.

​

iii.  Quick processing - These loans are available with out any security. If you satisfy the eligibility criteria, you get a Personal Loan approval in a short period. Certain banks give online approvals too.

​

iv. Fixed Rate of Interest - Banks decide the rate of interest on personal financing at the time of processing the loan application. It remains fixed throughout its tenure. Hence, you need not worry about variable EMIs (Equated Monthly Installments) or interest rate fluctuations.

​

v. Repayment flexibility -The average repayment period of a Personal Loan ranges from 36 months to 84 months. The more extended the loan repayment period, the lower the EMI. Individual financial institutions allow you to repay the interest amount alone every month with the arrangement of paying a pre-determined amount towards the principal repayment at the end of the year.

​

vii. Tax benefits - If you avail a Personal Loan for renovating your home, you are eligible for Income Tax deductions up to 2 Lakhs under Section 24B of the Income Tax Act, 1961. However, you will have to prove that you used the loan for home renovation only.

​

4) Business Loan

​

Finance received from banks or other financial institutions for the purpose of investment in a business by way of working capital and term loan is a Business Loan. The term loan is provided for capital investment like the purchase of plant and machinery, repairs of the existing plant and machinery, to build infrastructure, to expand the existing business, and any other requirement to take the business to the next level. The working capital finance is to meet the operational expenses like the purchase of inventory, hiring of staff, payment of utility bills, and so on.

​

​

Key Features of Business Loan

​

i. Purpose - To meet the financial requirements of the business. It could be for the purchase of new plant and machinery, to replace the existing plant and machinery, building infrastructure, expanding the business, and so on, that is required to take the business to a greater level. Also, working capital finance is extended to provide for the day to day operational cost of the business.

​

ii. Quantum - The quantum depends on the project for which the finance is required. The assessment is based on the vision of the business which is depicted in the projected financial statements for years up to which the repayment is fixed, the profile of the promoters, expected cash flow from the business which will give an insight as to the repayment capacity. For projects where the loan required is above 2 Crores, the project appraisal will be done by a team of skilled persons from the Project Finance Department (PFD) of the bank/financial institution. Based on the viability report of the PFD and considering various other factors like the liquidity ratio, the DSCR, i.e., Debt Service Coverage Ratio, the Fixed Asset Ratio, etc., the quantum will be decided.

​

iii. Interest -  The rate of interest will vary from lender to lender and will be in the range between 11% p.a. to 20% p.a., depending on the loan quantum, the project for which the finance is sought, line of activity, the business sector, and the customer's profile. 

​

iv. Security - The security depends on the quantum of loan and also the business sector. For a loan up to 2 Crores to MSME Sector, no collateral security is insisted. The loan will be covered by the Credit Guarantee Scheme. Normally the primary security will be by way of hypothecation of the stocks and receivables if the finance is for working capital and hypothecation of the assets created out of the bank finance if the loan is for capital investment. Collateral security by way of residential/commercial property will be required. The agricultural property will not be accepted unless the finance is for agricultural and allied activities.

​

v. Repayment - The working capital finance is short-term finance provided for a period of 6 to 12 months which will be renewed on an annual review. The repayment period for term loans ranges from 3 years to 8 years and even till 20 years if the construction of business premises is involved.

​

vi. Processing fee - Processing fee also depends on the nature of the activity and the business sector but generally will range from 0.25% to 2% depending on the bank/financial institution.

​

vii. Pre-payment charges - Some of the lenders do not collect any pre-payment charges while others charge 2% to 4% on the outstanding balance.