Mortgage Loan outline:
Creating an asset requires hard work & determination, may it be a House or a business property or land, the rewards for possession are many. Apart from giving a consolation and identity of a lifespan, a property can also be mortgaged to advance your dreams or arrange funds in an emergency. Mortgage Loans are termed as Loan against Property also. The property is guarantee to the Loan provider for the loan amount therefore it comes in as secured loan category.
In Business, sometime working capital stands short to meet the requirement of instant opportunities or new opportunities. If the existing loan arrangements are over -leveraged then lenders usually demand collateral to safeguard the risk of higher leverage.
Sometime business expansion or replacing rented premises with owned premises offer better structure in terms of monthly cost. If it works out positive then taking funds on property is a win-win situation for borrower to create new asset without adding monthly outgo of funds for rent etc. Similarly for major expansion based on the established business can reduce interest cost drastically if it is availed on mortgaging asset.
Features of Mortgage Loan:
The loan amount based on the total value of property & repayment capacity of the borrower.
Property work as collateral for the loan without loosing ownership or usage.
At NKB Kredit, we provide customized property loan according to your needs. You may be rest assured, we have a solution for every need. Our smooth process will provide a hassle-free experience for each customer.
You may seek our expert advise to answers your queries you may have or any information you need via phone, email, or else by submitting your basic information online for funds.
NKB Kredit arrange best in class mortgage products which suit your need and our advisory will assure you the transparent experience of execution skills.
Funds under some of the mortgage products can be raised up to 200% of asset value & the business credentials. Banks generally take asset as additional security to safeguard the future exigency but if business credentials are sound & visible then they can go even beyond 200% value of asset.
Complete Chain of Property Papers to establish the title of the borrower
Income & financial documents to establish the repayment capacity of the borrower
KYC documents of the applicant & co-applicant.
Purpose Of Mortgage Loans
The purpose of taking Loan against property or mortgage loans could be anything. Below are detailed note for each category:
Any person can take a loan against property for setting up a new business or expansion of existing business. The expansion can be in the form of buying new machinery, creating inventory for future demand or enhancing working capital cycle by extending credit to the buyers or it can be establishment of new set-up of plant for higher production. All such business purposes which put major impact on routine operations are eligible for LAP or loan against property.
Sometime equity investors are also willing to extend exposure over & above their capital infusion as debt against mortgage of business assets. They usually hold 2nd charge on assets but get security for their debt funding. An asset backed entity holds better visibility in front of equity investors to establish the earnings in the form of past performance & taking funds by mortgaging business assets entails higher comfort due to low cost funds for operation.
Personal Emergency / needs
Life is uncertain, you never know when medical emergency may come. Loan against property assist you to meet such urgent requirements.
Similarly in Indian culture, marriage marks one of the most joyful and memorable events for anyone. While marriage spending vary among people based on their tastes and capacity but generally most weddings exceed the planned budget. A loan against property helps to overcome the requirement of a fund such needs.
Similarly going abroad for Higher Education requires funds in a large amount. A loan against property assists an individual to settle these education fees and dream of getting a degree from foreign universities.
You are required to fulfil the following criteria in order to be eligible for a loan against property:
Age: Minimum age of the applicant should be at least 21 years & maximum should be 65 years at the time of application however some relaxation can be considered on case to case basis.
Income: The applicants are required to establish the repayment capacity out of their monthly earnings / cash flows of their business.
Business Stability: Any running business or new business is eligible for loan against property provided the business owners should have sufficient experience to run such business & anything new venture is treated on the quantum of other business experience and low LTV (loan to value) as safety measure for business funding.
CIBIL score: A CIBIL derogatory is not allowed in any loan however anything which is under contest or protest can be considered provided sufficient documentary proofs are available. In terms of CIBIL score, it should be above 600 however poor CIBIL score is factor of repayment default which leads to rejection of loans
Property Value: The secured loans are meant to provide security to the lender which otherwise seems risky funding. To safely cover the lenders’ exposure, the loans are provided lower than the property value which may be 60% however higher quantum can be raised depending upon business credentials & visible executable projects.
Property approval and documents: Any property with clear title for last 13 years is basic requirement for any LAP however to establish the 13 years chain the borrower need to establish the valid document for the ownership of previous owner which ultimately goes till 33 years old chain. However this is subjective to each property & clear title establishment from the property document is underlying objective. All kind of properties are considering as collateral i.e. residential, commercial & industrial property.
Rate of Interest: The interest rate varies from 7% or more depending upon the prime lending rate (PLR) of banks & announced by RBI time to time. The interest rate also varied on the kind of property & usage of funds. The normal LAP is offered at lower rate compared to OD / CC limit because the limit carries facility of adhoc fund utilisation facility without interest commitment on unutilized limit.
Type of Mortgage Loans
Type of Loan against Property varies in two categories.
- Regular Term Loans:
- Annual working capital limit in the form of CC / OD limits
Regular Term Loans: Regular term loans are repaid on monthly installments & can be obtained for any purpose defined above namely Business Expansion, Medical Emergency, Higher Education & Wedding or any other purpose borrower seems fit to borrow.
Mortgage Loans as Cash Credit Limit (CC limit)/ Overdraft limit (OD limit):
CC limit or OD limit is provided for businesses which are not needing regular funds of equal amount in other words when a business needs funds for short duration then they generally prefer to avail overdraft facility or cash credit facility. The OD / CC facility is based on the business volume on current basis and on projected basis. The requirement of funds is met whenever such opportunity arises for borrower & after completion of the opportunity, the surplus funds are deposited back in bank so that interest burden is borne only for the period of funds actually utilized. This helps to a business to reduce its interest burden. This option is highly acceptable to a business who has fluctuating requirements of funds throughout the year.
Reverse Mortgage Loan:
A reverse mortgage is a mortgage loan, generally secured by a residential property that enables the borrower to get the unencumbered value of the property in periodic payments & repaid in the form of handing over the mortgaged assets to the lender. These loans are typically taken by old age home owners to ensure desired cash flow to meet their routine expenses because of no other source of income. The repayment of reverse mortgage done through the liquidation of mortgaged property only. It does not require monthly payments as we do in normal mortgage loans.
Property owners are still responsible for maintaining their property in well manner & pay the desired dues like periodic taxes and property insurance for safeguarding in exigency. Reverse mortgages allow senior citizens to raise funds through their property / home which they built while they were into working & use it as slow liquidation of illiquid asset through reverse mortgage and defer payment of the funds till they die, sell, or move away of the home. All the borrowed fund & interest thereon is recovered collectively at the final settlement.
I approached to Mr. Bansal when we were stuck for an urgent fund requirement for our group organization. He took time to analyze & made detailed presentation of our business. He brought multiple lenders on-board after clearing their doubts & queries. Though our Finance team was supporting him but we seldom spare time to think how the things would mature. Thankfully to his minute planning, we were able to secure desired funding timely. I would like to state very categorically that after shouldering the responsibility to Mr. Bansal, one can rest assure for best possible executions. The actual delivery may be delayed but delivery remains visible because of his transparent & logical working. If any business house is unable to get desired funds, a consultation with Mr. Bansal is highly recommended to get to know the way out to come out of woods. His meticulous working has no comparison.
Mr. Bansal is highly supportive to understand a business & its needs. I have approached him twice during last two years & thanks to his execution capabilities & assessment he advised me pin-pointedly to plan the expansions & after that dotted execution has made me confident to move ahead my business expansion. I highly recommend an SME business to consult Mr. Bansal for his impartial advice on funding. I can vouch for his transparent, straight & honest advice which will help in focused working.
We came across Mr.Naresh Bansal in the year 2017 and have been availing his services till date in raising business funding through multiple NBFCs/MNC banking institutions and have been extremely satisfied by his approach towards achieving the objectives detailed to him. He bears a good moral character and is highly motivated and focused in his approach.
A mild mannered gentleman who has a heart of a tiger within.
Wish him all the very best ALWAYS
We have approached with susceptible thoughts about fund raising because our quantum of funds was high & unable to offer security for it but when Mr. Bansal assure us about fund raising, we first doubted on his statements but thanks to his execution skills we achieved the desired funding in record timeframe.
Presentation of good feature of a business & hard bargain on the cost is his one of the best skill to assess. May God bless him more to understand & deliver good work.
Mr. Bansal personally himself gives attention to minute detail of the business & highly focused on the results. A thorough gentle and transparent approach made him above the normal service providers.