Frequently Asked Questions on Loan Against Property (LAP)
1. What are the products offered under Loan Against Property (LAP)
(i) Acquisition of commercial premises
(ii) Loan against Rent receivables
(iii) Loan against Commercial property
(iv) Loan against Residential Property
2. What are the charges applicable on Loan Against Property product?
Application fees, Processing Fees, Legal fees, Stamp duty for mortgage, registration charges for registered mortgage if applicable, etc.
3. How is the basic loan eligibility calculated?
Your loan eligibility will be decided based on your repayment capacity. Repayment capacity takes into consideration factors such as income, age, qualifications, spouse’s income, property value, Existing obligations if any...
4. Can I take my Brother/Son/ Daughter/ Father as co-applicant?
You can include your spouse/parents/children/ siblings as a co-applicant for the Loan and we shall include his / her income to enhance your loan eligibility.
5. What are the modes of repayments and how many Post Date Cheques (PDCs) to be taken for disbursement?
Repayment of loan will be made through Post Dated Cheques (PDCs) or Electronic Clearing Services (ECS). The PDCs will be collected on the basis of the number of installments in your repayment schedule.
6. What are the pre and post disbursal documents for Balance Transfer case?
Pre disbursal documents -
1.Outstanding principal statement - Must be on the letterhead of existing Home Finance Company (HFC)/ Bank and must contain
- Applicant and/or co applicant names
- Loan account number
- Outstanding principal amount
- Pre payment charges (if any) amount
- Any other dues (if any) amount
2. Property documents - Prior to sanction, customer needs to submit a declaration –cum- undertaking to Tata Capital Housing Finance Limited (TCHFL) with respect to the legal documents submitted to the HFC/ Bank interalia undertaking to deposit the original documents.
Prior to Disbursal- A list of documents from the HFC/ Bank & photocopies of documents kept with existing HFC/Bank.
3. Irrevocable Power of Attorney (POA) - Required from the customer in favor of TCHFL. The POA has to be executed on stamp paper of the requisite value and should be duly notarized from a Notary Public.
Post disbursal documents –
1. Receipt for disbursal from TCHFL- The receipt issued by earlier HFC/Bank to be obtained.
2.Loan clearance from HFC/ Bank- A mortgage release letter to be obtained by the customer from the HFC/ Bank, stating no dues and release of mortgage on the property.
3.Property documents- Original title deeds to be deposited by the customer with TCHFL as per the list provided by HFC /Bank.
4. Release of Registered Mortgage / Memorandum of Entry (MOE) /Registrar of Companies (ROC) charge wherever applicable- In cases where the previous HFC / Bank has created a registered mortgage / MOE /ROC charge on the property, the said charge would required to be cleared thru necessary documentation.
7. What documents can be submitted for Know Your Customer (KYC)?
Any one of the documents from each of the following categories to be submitted for KYC:
Age proof documents- Passport, Driving License, Life Insurance Policy, Birth certificate, PAN Card, school leaving certificate.
Identity Proof Documents- ID proof in the form of Passport, Driving license, PAN, voters ID.
Residence address proof- Residence proof required in form of Utility Bill, , Bank statements, Property registration documents, Property tax receipt, Voter id.
Office Address proof- Employee ID card/Appointment letter/Letter from employer on the letter head.
Income Proof: For Salaried- Last three months’ salary slip and Appointment letter/ yearly increment letter. If salaried, then certified true copy of the Form 16 is a mandatory requirement; for self employed: last 2 years IT return with supportive documents, business profile on letter head, Registration certificate for business commencement.
Bank Statements - For Salaried: Bank statement required for the last 6 months from the Salary account. ; For self employed: operative current account statement for 6 months, also, if any, CC / OD facilities taken corresponding bank statements for 6 months to be submitted.
8. When is the change in the Rate of Interest communicated to customer
As soon as the company changes the applicable Rate of Interest, notifies the same on its website and thereafter in due course of time intimated to the customer.
9. What is meant by EMI?
Equated Monthly Installment (EMI) is a fixed amount which a customer repays on a monthly basis EMI covers both the interest and the principal amount.
10. What is an amortization schedule?
An amortization schedule is a table giving the reduction of your loan amount by monthly installments. The amortization schedule gives the break-up of every EMI towards repayment of interest and outstanding principal of your loan.
11. Who can be taken as a Co-Applicant?
You can include your spouse/ parents / children / siblings as a Co-Applicant for the Loan. His / her income can be added to enhance the loan amount. However all Co-owners of the property should necessarily be the co-applicant.
12. Which types of income and how much is included in loan eligibility calculation
We interalia consider the following:
Business Income: Profit after tax as reflected in the Income tax returns and Profit and Loss statement.
Depreciation: 2/3rd of the depreciation as claimed in the P&L can be considered for income purpose.
Agricultural income: Agricultural income should reflect in the Income tax returns for at least 2 years.
Salary: Income as reflected in Net Salary reflected in the salary slips.
Rental Income: Rental Income can be considered if it reflects in Income tax returns / Bank statement/Rental agreements.
Interest Add back: In case of buy over of a housing loan from another institution then the interest paid to the bank in that financial year can be added back if it reflects as an expense in the P&L.
Other Income: Interest income, dividend income, income from investment and income from part time business like tuitions etc can be added if reflected consistently in the Income tax returns for at least two years.
13 . What are the end uses of the loan which can be sanctioned?
- Personal needs
- Business needs
- Renovation of property
- Consolidation of debt
- Mortgage buyout
14. I have only a few years to retire? Am I eligible for a Loan Against Property?
Yes, if the salary matches the loan requirement and the tenor will be equal to the number of years left for retirement.
15. How can I enhance my loan eligibility?
You can enhance your eligibility by foreclosing your existing loan obligations and/or adding the income of earning applicants to the loan.
16. What if the EMI cheque bounces?
Please refer to the schedule of Service charges for the details.
17. How do I replenish the exhausted PDCs or Swap ECS?
You may replenish the exhausted PDCs by handing over the cheques at our Branch.
18. What are the cheque bounce charges?
Please refer to the schedule of Service charges for the details.
19. What are overdue charges and how are they calculated?
Overdue charges are levied on unpaid EMI, Please refer to the schedule of Service charges for complete details.