Housing Loans: Generally, Housing loans from Banks/FIs could be availed for purchasing a flat, row house, Bungalow and a plot of land for construction of house thereon within a limited period. The in principle approval is quicker in the approved projects by Banks/FIs. Banks/FIs offer your two types of loans one is fixed interest rate loans and other is floating interest rate loans. Some Banks are offering an overdraft facility also for housing loans where drawing power is reduced on monthly basis but that account could be used as a running account. Interest rates range varies from loan amounts and is linked to base rate or mortgage reference rate. Housing loans could be availed singly or jointly by salaried individuals, professionals or businessman. Loan amount would depend on the cost or market or ready reckoner rate of the property being purchased with stipulated margin. The maximum period of loan could get extended to 30 years depending on the age of the applicant, retirement age etc.
Loan against Property: These loans could be availed against a fully constructed residential or commercial freehold property for business needs; marriage, medical expenses and other personal requirements. Interest rates and margin requirement are higher in these types of loans. Such loans could also be availed in the form of an overdraft facility even for business purposes. Salaried individuals, professionals or businessman could avail loan/overdraft on fixed/floating interest rate basis. The duration of loans/overdraft is restricted for a maximum period of 15/20 years.
Loan against Securities: Many investors build a portfolio of shares, bonds, mutual fund, fixed deposits and insurance policies. Banks/FIs extend loans against security of these assets to the extent of 50% (for shares) to 90% (for fixed deposits). Banks/FIs provide an exhaustive list of approved securities/shares against which they are willing to provide loan/overdraft facility. Since these types of loan are secured in nature, interest rate charged is reasonable and less than that of personal loans. Repayment is based on EMI for loan facility whereas interest is to be serviced at regular intervals for overdraft facility.
Personal Loans: These types of loan are unsecured in nature therefore carry a higher rate of interest than other loans. The quantum of loan would depend on the salary/professional /business income. In case of salaried employees, some of the Banks/FIs have categorized Corporate in different grades for the purpose of determination of interest rate. The age criterion for individuals is between 21 years and 60 years with threshold level of income and minimum length of service/profession/business. Bank statements are collected for checking the track record of the transactions in the account. ITRs/Form 16 is collected to determine the eligibility of the loan amount for salaried/professionals.
Business Loans: Micro, Small and Medium Enterprises (MSME) could avail business loans to fulfill every business need from business expansion to working capital. The period of business loans is medium term in nature whereas cash credit/overdraft facility has to be reviewed every year. Banks charge a processing fee for sanctioning business loans. The interest rates are linked to the base rate of the Bank and vary from the rating of the borrower. Self employed individuals, proprietors, partnership firms and private limited companies involved in the business of manufacturing, trading or services are eligible to avail such loans. The minimum length of the business, age, annual income, business turnover, profit making entity would vary from Bank to Bank.
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