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Indian Loves India » Home Loan » What Is A Home Equity Loan?

What Is A Home Equity Loan?

Home equity loans allow the customer to encash the market value of the commodity by taking a loan after mortgaging the property. Home equity loans are availed by such customers who want to mortgage his/her property to the bank for taking some loan for meeting their varied needs. Then, it depends upon bank’s discretion to decide the market value of the property and accordingly decide how much amount is required to pay the customer.

It is possible to consider both the residential as well as non-residential property for the approval of the loan, provided the mortgager should be a licensed title holder and above all the land should be free from dispute.

Home equity loans don’t restrict the person for using the loan money for specific investments. As you can use it in marriage, high education, medical expenditures, etc. However, you should not use it in any illegal or speculation work.

Conditions which are applicable on Home Equity Loans -:

  • An individual or someone with joint account will be allowed to apply for the home equity loans. However, it is necessary that the co-applicants should not be the co-owners of the property.
  • Nearly, 60 per cent-65 per cent of the actual value of the property can be get as the loan, which may be as high as Rs 10 lakh for commercial and residential property and it is repayment period, which may vary from 10 years to 15 years, on the basis of the individual bank policies.
  • The borrower can choose either fixed or floating rates of interest in accordance to its requirements.

Documents needed by banks in case of home equity loans are:

In case of salaried customers -:

  • Duly filled application form along with photograph.
  • Identification and proof of residence.
  • Latest salary slip or certificate.
  • Form16.
  • Last six months bank’s statement.
  • Processing fee cheque.

In case of businessman/self-employed professional -:

  • Duly filled application form along with photograph.
  • Identification and proof of residence.
  • Proof of existence of business.
  • Last 3 years income tax return
  • Last 3 years income statement and balance sheet of the business.
  • Last 3 month’s personal and business bank statements.
  • Cheque of Processing fee.
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