Facing a financial crunch? Then, you must be planning to apply for a loan. But, getting it sanctioned is not an easy thing as it involve a process and the burden of EMIs and other payments also make the approval difficult. In this scenario, the first thing people calculate is the additional income they earned from hiring a tenant. So scroll down the page and know the details about the loan against rental income.
- What is a Loan against Rental?
This is a loan offered by the banks and other financing institutions to the property owners who earn rental income from the property registered in their name. In short, this loan is offered while considering your CIBIL score, repayment ability and the amount you are going to earn form the rental income in order to pay back the loan against rental.
- Criteria to Avail Loan against Rental
Any person owning a residential or commercial property in his/her name can apply for a loan against rental. But, the property against which you are making an application must be on rent/lease. Also, you are required to declare this property as to-let means that the loan applicant is looking for prospects to sell this property.
Those owning a property jointly are required to appear as two applicants for the loan against rental.
- Entitled Properties to Avail Loan against Rental
The property that is on rent/lease along with the To-Let condition is said to be eligible for availing loan against rental. The bank/financial institutions will not approve this loan in case you fail to produce the registered rent or lease agreement at the time of applying.
- Rate of Interest and Other Charges
The processing fee is 1 percent that is charged by the bank/financial institution on the loan amount. Similarly, the rate of interest differs as it depends on the borrower’s financial position and the bank/financial institutions.
In the current period, the rate of interest is 10 and 13 percent respectively. Also, the repayment period is for 10 years and it can also not exceed the time of the lease/rent agreement that is attached to the loan application.
- Security for Loan against Rental
The only security bank/financial institution keep in place is by charging the property against which the loan is availed. A person is not eligible for a loan against rental income in case he/she is already having an ongoing home loan.
- Documents Required for Availing of Loan against Rental:
- KYC Details
- Address Proof
- Identity Proof
- Form16/ Income Tac Return for Salaried People
- Account Audit Report for Self-Employed People
- Income Tax return for 2/3 Years for Self-Employed People
- Usage of Loan against Rental:
- Buying a Home
- Renovation of a Home
- Business Expansion
- Marriage Purpose
- Education of your Children
Note: A loan against rental is applicable to the property owners with rental income from their property which is listed as property to-let.