During your financial crisis, out of these three, it is your home that will help you out of the situation. But then there is a problem attached to it again. Since our house being a non-liquid asset it take time to sell of our house during times of need and in case of emergencies it becomes all the mo9re difficult to find a good deal with the buyers.
Hence, it is always advisable to mortgage your house, as security, to take up the loan. This is what is "Loan Against Property".
But for banks or financial institutes even your house isn't much of any kind of asset, although it would be of more value than the loan take. It is difficult for banks as well to sell your property and get the money, in case of a default. Thats why they would require a proof of your income, although you would be mortgaging your property. Also, banks find it little difficult to evict the existing occupants to sell it off.
Therefore, banks also prefer that you pay them back through your salary and the situation of selling the security doesn't turn up only. Hence, you would be required to submit your proof of income while applying for Loan against Property as well.
Just remember few things:
- Banks will not lend you loan on the full value of your property, as the value of the property might deplete with time and area.
- Your loan would be based on certain percentage of the value of your property - 40-60%.
- Loan amount might also be given 2-2.5 times of your current income as compared to your house value, whichever is lower.
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