Loan against mortgage is an alternate substitute to loan against property which can be opted by the borrower so as to obtain loans in order to buy an alternate property, or use the credit funds for business expansion, renovation of the house or office, housing loan. The land which can be mortgaged can be located anywhere in the urban areas or else in the outskirts land. Also both the agricultural or non-agricultural land can be given as loan against mortgage so as to gain credit facility from the bank or financial institution. Land mortgage can help gain liquid cash in hand of the borrower without selling the land.

Owning a land is a distinct ownership and pride. It also brings a lot of happiness & joy and achievement of the land owner. Other emotions also play a key role are a great sense of security and peace of mind. These days a number of lenders offer loans to the borrowers who mortgage their land as a security deposit in case of opting for loans. A loan against mortgage can be used to construct homes, construct a factory building, or a commercial land against the credit obtained. There are some factors which needed to be known before applying for the product.

Eligibility for applying for loan:

Firstly the borrower should ensure the eligibility of the land against property so as to ensure the credit liability.

For salaried individuals:

• You should be minimum 18 years of age while borrowing the loan and maximum 60 years of age.
• The applicant should be a resident of India.
• The applicant should have a bachelor’s degree.
• You should be employed in a private limited company, partnership firm, MNC, Public limited company, government or public sector company.
• Your minimum monthly income should be Rs.40,000 and above.

For self-employed individual and non-professionals:

• The applicant should be at least 21 years of age while the time applying for loan.
• The applicant should not be more than 65 years of age before the end of the loan moratorium.
• The business organization should be more than 3 years old and in a running state.
• The business should have declared profits in the past two consecutive years.

Required Documents:

• Application form.
• Government id proof pan card, identity proof, address profit, ownership proof.
• Income declaration proving ability of the borrower to be able to repay the loan.
• Property documents with clear titles and with no borrowing loans pending on the land or else no co-owner should be involved in the ownership of land. The property should be independently owned by the borrower.

For salaried individuals:

• Last 3 months salary slip.
• Form 16 applicable.
• Proof of employment form 16 does not match with the current employer.
• Last 6 months Emi for repayment and salary.

For self employed individuals and self-employed professionals:

• Proof of documents of business continuity by providing one of the documents- Shop and establishment registration- Vat/service registration/ GST registration.
• Proof of firm constitution via submission of either of documents- Moa/ AOA/ partnership firm/GST registration/ form 32 for knowing the latest directors.
• Audited financials for last 3 years.
• Audited financials for last three years.
• Tax audit report for the last three years- Form 3Cb + 3 CD in case of properties and partnership and Form 3CA+ 3CD in case of companies.
• Latest VAT/GST/Service tax returns for the current financial year.
• The breakup of all secured and unsecured loans.
• As on date list of directors shareholding pattern.
• Sanction letters for any existing loans with corresponding statements reflecting EMI’s for the last year.
• Business account statement for last 1 year.

Benefits:

A land mortgage loan can be used to be build a house, a factory, a business unit, company expansion, purchase of machinery, debt consolidation or funding any other business related expenses.

Tax benefit:

There are tax benefits that you enjoy on the interest components of your Emi’s. However, this loan may not help you save on your income tax. To know more however, please have a detailed discussion with your lender. You are also advised to read the terms & conditions of the loan documents thoroughly.

Conclusion:

Thus we can conclude that the mortgage loan taken against the land property is an option for obtaining credits through the bank or financial institution. The banks always verify the land record details with clear titles so as to approve the loans. Instead of selling the land and getting liquid cash in hand it is always better to mortgage it and get some hand in cash and in later stage it can be repaid from the running income.