SBI Loan Against Property

State Bank of India (SBI) is the largest public sector bank in India, and it offers a wide range of banking products and services to its customers across the country and even overseas. Among all services, the loan against property segment stands out as one of its prominent offerings. SBI offers an assortment of loans against property for its customers.

SBI is one of the top Indian banks that offer you an affordable Loan against Property. This is the loan you should consider when you are faced with emergency situations. This is also an option when you have a need for money for your child’s education, for marriage, for healthcare, and much more.

In short, you can use the funds of many things, as long as they are legal. The bank won’t even ask what the fund’s end use has been! SBI says that this loan is for employees, self-employed people and professionals. NRIs and IT assesses who have residential or commercial properties under their own name can get the loan. You are also eligible if the properties are under the name of your sibling, parent, spouse and children.

When emergency knocks on the door, most people resort to a personal loan. But there is a limitation on personal loans, as you can't withdraw a significant amount. This is where SBI's loan against property comes into the picture. Your purpose is not questioned for these loans and the amount can go from Rs. 25 lakhs to over Rs. 1 crore depending on the conditions set forth by the bank. Besides, these loans can also be repaid over a period ranging from 5 years to 10 years. Apart from everything mentioned above, the loan process offers utmost transparency, and no hidden charges are levied on the customer. Now, let’s delve into the topic.

What Are the Different Types of SBI Loans Against Property?

It can be broadly divided into two types:

a) Loan Against Mortgage of Immovable Property

      This kind of loan is issued against mortgage of properties that are immovable in nature. Let's look at the features:

• The loan is issued for general purpose use, and it should not be utilized for any other purpose, like in the real estate market or the capital market.

• The minimum amount of loan disbursed under this scheme is Rs.10 lakhs, whereas the maximum loan amount offered is Rs. 5 crore

• Also, the ratio of Equated Monthly Installment and the Net Monthly Income should never exceed more than 50%.

• The final amount of the loan is 65% of the market value of the mortgaged property, so that the ratio of Equated Monthly Instalment to the Net Monthly Income does not exceed 50%.

• A customer can repay the loan within a maximum period of 180 months.

• The customer can also prepay the loan anytime, as SBI does levy any charges on prepayment of the loan.

 b) Rent Plus Loan Against Property

      SBI's Rent Plus Loan-Against-Property offers loans against the assignment of future rents to commercial and residential property owners to meet their monetary requirements. Let's look at the features of the loan:

• The amount available under the scheme is calculated as the lowest of the realizable value of the mortgaged property. This is calculated as per the valuation by SBI as the maximum permissible amount under the scheme, or 75% of the total rent receivable over the loan period minus the advance deposit, TDS, estimated amount of property tax, service tax, and other statutory dues of the period.

• The minimum amount of loan permissible under this scheme is Rs.50, 000, and the maximum is Rs. 5 crores for non-metro cities and Rs. 7.5 crores for metro cities.

• The State Bank of India has reserved a margin of 25% of the loan amount.

• The repayment period for this scheme is either a maximum of 10 years or the residual period of lease of the property, whichever is less.

• Repayment of the EMI for these loans can be made through post-dated cheques drawn against the applicant's bank account, through the ECS facility, or by issuing a Standing Instruction to the bank to deduct the EMIs as and when they fall due from the applicant's savings or current account. However, to avail the Standing Instruction facility, you need to have an existing bank account with SBI.

• The processing fee of this scheme is 2.02% of the loan amount + GST + service tax.  A maximum amount of Rs. 1,01,865/- should be paid upfront as processing charges.

• As there are no prepayment charges, a customer can prepay against the loan to reduce the interest rate.

SBI Loan Against Property Interest Rates and Processing Fees

SBI Loan Against Property Interest Rates 2019
Interest Rate	10% onwards
Loan Tenor	Min. 5 Years & Max. 15 Years
Max Age Criteria	Loan should be liquidated before the borrower reaches 70 years of age
Processing Fees	Upto 1% of the loan amount, Max. Rs. 50000 + GST
Minimum Loan Amount	Rs. 10 lakhs
Maximum Loan Amount	Rs. 7.5 crores
LTV Ratio	65% for loans upto Rs. 1 cr, 60% for loans above Rs. 1 cr & upto Rs. 7.5 CR.
Minimum Net Income	Rs. 25000/- per month
Security	Equitable mortgage of the property

SBI LAP Interest Rates: The tables below represent the loan liability and also the interest rates:

MCLR for 1 year = 8.55%

SBI Mortgage Loan Interest Rate for Salaried Employees
Loan Amount	Rate of Interest
For Loans upto Rs.1 crore	1.45% + 1 years MCLR = 10%
Loans above Rs.1 crore	2.10% + 1 year MCLR = 10.65%
Above Rs. 2 crores & upto Rs. 7.50 crores	2.50% + 1 year MCLR = 11.05%

 

SBI LAP Interest Rate for Self-employed Individuals
Loan Amount	Rate of Interest
Loans up to Rs.1 crore	2.10% + 1 years MCLR = 10.65%
Loans above Rs.1 crore	2.60% + 1 year MCLR = 11.15%
Above Rs. 2 crores & upto Rs. 7.50 crores	3.00% + 1 year MCLR = 11.55%

What Are the Highlights of SBI's Loan Against Property?

Let's look at the advantages of availing a loan against property from SBI:

• The complete process - from application to disbursal - is transparent. 

• A customer can access any of the loans against property from SBI's vast network of branches all across India.

• Interest rates on the loan amount are levied following a monthly/daily reducing balance method.

• SBI offers the lowest processing charges.

• Customers can repay their loan in a maximum period of 180 months.

• There are zero hidden costs or administrative charges.

• A customer can prepay without worrying about prepayment charges if he/she has extra funds at any point.

What Is the Eligibility Criteria for These Loan Schemes?

Eligibility for Loan Against Mortgage of Immovable Property

• This SBI scheme is available to professionals, employees, self-employed individuals, or others who have a piece of property in their name or the name of a third party, provided the third party agrees to guarantee the loan.

• The minimum net monthly income for a salaried employee should be Rs. 25,000, while for others, the minimum net annual income should be more than Rs. 3 lakhs.

• The maximum age limit of an applicant is 70 years at the time of loan liquidation.

Eligibility for Rent Plus LAP

• This scheme is made available to owners of commercial properties or residential buildings that are to be rented or are already leased to MNCs, banks, or other medium-sized or large corporates.

• The property should be located in a metro, urban, semi-urban, or rural area.

• The applicant should have all the plan approvals and other related permissions from appropriate authorities in place for the property.

• The property should not, previously or currently, be leased to colleges, hospitals, schools, nursing homes, orphanages, or any other social sector infrastructure.

What are the Documents Required for Salaried and Self-employed Individuals?

For Self-Employed Individuals

1. Duly filled in application form

2. 2 passport size photos

3. ITR for the last three years

4. Identity Proof  of any kind, such as driving license/passport/PAN/voter ID card.

5. Residential address proof along with leave and license/registered rent agreement/ utility bill for the last three months

6. Business proof, such as business address proof, VAT/service tax registration, incorporation details in case of companies, copy of partnership deed, balance sheets certified by CA, and evidence of the existence of business and business profile.

For a Salaried employee

1. Duly filled in loan application

2. 2 passport size photos

3. ITR for the last two years

4. Identity proof of any kind, such as voter ID/ PAN/passport/driving license.

5. Residential address proof, like leave and license/registered rent agreement/utility bill for the last three months

6. Income documents, including payslip for the last six months, Form 16 for the last two years, and bank statements for the last 6 months (to show authenticity and for EMI debit)

Property documents

1. Registered conveyance/lease deed/sale deed.

2. Past Sale Deeds Chain to confirm each transaction with respect to the particular property since its first allotment

3. Latest house tax receipt

4. Approval receipt of the building plan from the Municipal Corporation

How to Apply for SBI Loan Against Property Online and Offline

To apply for SBI loans against property, one can either go for online application or offline application. Let's take a look at the process:

Online Application:

Visit this link to duly fill in the application form, and then follow the instructions provided. An SBI agent will contact you soon to guide you through the loan application process.

Offline Application:

If you are skeptical about applying for a loan online, you can always visit an SBI branch to apply for a loan. Request a bank executive to guide you through the loan process.

Features of SBI Loan against Property

We shall now tell you about the many features of the SBI Loan against Property. They are: 

• Complete transparency in operations

• Personal loan to individual owners of residential home/flat and select commercial properties

• Access this loan from our wide network of branches

• Interest rates are levied on a daily reducing balance method

• Lowest processing charges.

• Rental income in select cases is also considered for loan eligibility.

• No prepayment penalties. You can have surplus funds at any time thereby conveniently reducing your loan liability and interest burden.

About the scheme

1. The minimum loan amount is Rs. 10 lakhs

2. The maximum loan amount is Rs. 7.5 crore according to the property’s valuation

3. The loon should be for personal purposes only, and not for speculation

4. The loan is against the mortgage of your residential or commercial property

Interest rates and processing fees

The processing fee is 1% of the loan amount. There is also service tax. The total is up to a maximum of Rs. 50000 plus service charge.

Loan security

For the SBI Loan against property, there should be an equitable mortgage of the agreed-upon property. 

The cases where the commercial properties are on rent, equitable mortgage on the property shall be developed and the assignment of the rental receivable shall be obtained. One shall also need the irrevocable power of attorney.

EMI ratio table

Net Annual Income	EMI ratio
> Rs. 3 lacs<= Rs.5	50%
> Rs. 5 lacs <= Rs.10 lacs	55%
> Rs.10 lacs	60%

•  

FAQ’s

What about the Loan to Value Ratio and the Loan Tenor?

For loans till Rs. 1 crore, the LTV is 65%. For loans from Rs. 1 crore to Rs. 7.5 crore, the LTV is 60%. 

The minimum loan tenure is 5 years and the maximum is 15 years.

What is the maximum age for the Loan against property?

This loan shall be liquidated before the eldest of the borrowers reaches 70 years of age.

What are the eligibility criteria?

• A. An individual who is;

  • • An Employee or

    • A Professional, self-employed or an income tax assesses or NRIs (Who has residential property or commercial properties in his own name or in the name of spouse / children/parent/sibling)

• B. Minimum net monthly income of Rs. 25000/- (or Rs. 3 lacs per annum)

• C. Loan under LAP should be liquidated before the eldest borrower attains the age of 70 years.

Q. What are the types of properties that can be used as collateral to avail loan against property?

A. Commercial properties such as offices and shops; other properties like hospitals, schools, residential houses, industrial properties; Self-occupied residential property; and all such properties can be used as collateral to avail a loan against property from SBI.

Q. How does the bank determine who is eligible to avail a loan against property?

A. The bank considers the following factors to determine the loan amount and eligibility criteria for availing a loan:

• Credit Score

• Age

• Valuation of property

• Income

• Past borrowing track record

• Stability/continuity of employment or business

Q. What are the tax incentives for a loan against property?

A. As such, there are no tax incentives for these loans. Although under the Indian Income Tax Act, 1961, tax exemptions are available for a home loan, they are not applicable for a loan against property.