Kotak Mahindra Loan Against Property

• Loan against property in Kotak Mahindra Bank can be availed against commercial, residential or industrial property.
• Loan Tenure: LAP’S are issued for a maximum period of 12 years. However, the tenure varies depending upon the purpose of the loan and the applicant’s business profile.
• The applicant can avail loans amounting from Rs. 10 lakh to Rs. 3 crore.
• In case of commercial property loans, or loans against existing properties, an applicant can avail up to 55% of the cost of the property as loan.
• The bank decides the amount that an individual can borrow, based on the repayment capacity of the borrower. The repayment capacity is calculated based on the borrower’s income, age , educational qualifications, no. of dependents, spouse’s income, assets, liabilities, savings history, occupation, business profile, the running time of the existing business and the net take home amount.
• Loan against property can be applied by individuals either jointly or solely.
• The bank also provides the facility of extending one’s eligibility by ways of adding a co applicant while applying for the loan. In this case, the co-applicant’s income is also taken into consideration before deciding the loan amount.
•  For availing a loan from Kotak Mahindra Bank the co-applicants can be the applicant’s parents, spouse or even children above the age of 18 years.
• The co-owners of the property, against which the loan is being sought, have to be a co applicant for the loan. However, it is not necessary for a co applicant to be a co-owner of the property in question.
• The bank allows flexible loan offerings in the form of EMI based loans or overdraft facility.
• The bank generally keeps the property under mortgage, as security till the maturity of the loan period. However, in certain cases, the applicant can also provide additional securities in the form of LIC policies or term deposit receipts issued by Kotak Mahindra bank.
• The bank also allows prepayment of the loan. However, early redemption charges as applicable will be levied by the bank. The pre-payment charge stands at 5% of the principal outstanding at the time of foreclosure.
• Kotak Mahindra Bank customers can use a loan against property EMI calculator to calculate the EMIs on the loan amount. They will need three principal elements: loan tenure, loan amount and rate of interest.

The following types of applicants are eligible for a loan against property from Kotak Bank:

1. For self-employed professionals:

• Age group- A person whether a self-employed professional or a business owner with a minimum age of 21 years can apply for LAP. The maximum age of the applicant at the time of loan maturity should be 65 years.
• Income: An applicant, whether a self-employed professional or self-employed non-professional, with a minimum annual income of Rs. 1.44 lakh as per his P&L a/c as certified by a CA can apply for this loan.
• The Firm/company owned by the applicant should be in operation for at least a period of 3 years. Applicable for both self-employed professional and self-employed non-professional.
• The Firm/company owned by the applicant should be making cash profits for at least a period of two years.
• Maximum 65 years of age at the time of loan maturity.

1. For self-employed business owners:

• Minimum annual income should be Rs. 1.44 lakh as per the P&L.
• Minimum age must be 21 years.
• Maximum age at the time of maturity should be 65 years.
• The company / firm should have been operational for the last 6 years.
• The company / firm should have been making cash profits for the past 2 years.

The following documents are needed for loan against property scheme from Kotak Mahindra Bank:

• Identity Proof
• Address Proof
• Date of Birth Proof
• Latest ITR along with computation of income, Balance sheet and Profit & Loss A/c for the last two years as certified by a CA professional
• Bank statement: These documents seek to verify the applicant’s income status prior to making the application for loan which also depicts the individual’s financial picture depicting the credit worthiness of the person.

• The bank disburses the loan amount once all the formalities pertaining to the documentation and the legal, credit and technical appraisals of the property is complete.
• Bank disburses the loan amount only after it gets a proof about the borrower’s own contribution towards the purchase of property. Own contribution refers to the difference amount between the coast of property and the amount of loan sanctioned.
• The bank disburses the loan amount depending upon the requirement of the funds and the progress of construction, as assessed by the bank. The bank can either disburse the entire amount at a go or at suitable instalments. The disbursement method is left at the discretion of the bank.

The agreement for sale between the seller/builder and the purchaser must have been registered at the office of the sub-registrar appointed by the state government under the Indian Registration Act, 1908

The property need not be insured. However, insurance ensures safety of one’s property in case of unforeseen incidents.

Kotak Mahindra bank adopts a floating loan liability and interest rate method, which is linked to its existing base rate. Base rate is the lowest interest rate i.e. Kotak bank cannot charge an interest lower than this rate. The base rate is directly related to the market interest rates. The base rate increases as the market rates increase, and decreases as the market rate decrease, thus providing a benefit of lower rates to both old and new borrowers. Base rate based loans provide a better and transparent interest rate transmission to the borrower in comparison to PLR based loans. The current base rate stands at 9.75%.

The bank charges an interest at the rate of 13% (9.75% BR+ 3.25% margin) for loans against property.

The bank levies certain types of charges on all loans that it issues. The list of charges is given below:

1. Loan Processing Charges: Also known as origination charges. These charges are levied at up to 2.00% of the loan amount plus service tax.
2. Documentation Charges: The bank levies a documentation charge amounting to Rs. 10,000, in the case of loan against property.
3. Stamping Charges: The bank levies stamping charge as applicable as the respective State’s Stamp Act on loan against property.
4. Credit administration charges: The bank levies no credit administration charge.
5. Credit appraisal charges: The bank levies no credit appraisal charge.
6. Commitment Charges: A commitment charge of 2% on the loan amount minus the disbursed amount is charged by the bank. These charges are valid, even if the loan is foreclosed before full disbursement of the sanctioned amount.
7. Over Due Interest: The applicant must make sure that the EMI’s are paid well on time; otherwise the bank levies an overdue fee of 2% on the EMI, calculated from the period of due date to the actual date of payment.
8. Collection Charges: The bank charges collection charges standing at 30% of the cheque/instrument charges + overdue interest. However, these charges are inclusive of service tax and other applicable statutory taxes.
9. Cheque Dishonour Charges: The bank levies a cheque return charge of Rs. 750, again inclusive of service tax and other applicable statutory taxes.
10. Swap Charges: These charges stand at Rs. 500 per swapping instance. These charges are exclusive of service tax. Service taxes and other statutory taxes as applicable will be levied above the mentioned charges.
11. Prepayment/Foreclosure charges: Prepayment is a facility offered by the bank wherein the customer can repay the entire loan amount before completion of the original tenure. However, certain things are to be kept in mind before opting for this option. In case, the applicant is an individual having applied for a loan under floating rate of interest, the bank allows the foreclosure of the loan without any prepayment charge. However, for every non-individual loan under floating rate of interest term loan, the bank does not allow prepayment before the expiry of a period of 6 months from the date of the first EMI. It means a minimum of 6 EMI’s have to be paid by the applicant before applying for a foreclosure. Having completed this period, the applicant can foreclose his loan by paying a prepayment charge of 4% of the principal outstanding amount+ 4% on amount prepaid in the last 12 months of the loan.
12. Duplicate No objection certificate/No due certificate: The applicant can also apply for a no Due certificate, if he so requires, he can obtain the same by paying Rs. 500 per NOC, exclusive of service tax and other statutory levies as applicable.
13. Solvency certificate: the bank also issues a solvency certificate, if required by the applicant. The bank charges Rs. 10,000 for issuance of such a certificate.
14. CIBIL copy charges: The bank also issues a copy of the credit information report, if required by the applicant at a minimal charge of Rs. 50+ S.T. and other statutory charges as applicable.
15. Amortisation schedule: In case the applicant wishes to get a detailed statement of his account displaying his loan transactions in a chronological order, he/she can do so by paying Rs. 250+ S.T. and other statutory charges as applicable. However, such an amortisation schedule is issued once on a yearly basis without any charge.
16. APAC Re-schedulement: The bank extends this service at an interest rate of 1% on the principal outstanding amount.
17. Part foreclosure charges: The bank also allows for part prepayment of the loan. However, a minimum of 6 months gap has to be kept between the part payment and the first EMI date. The bank allows a free part payment in case, the applicant wishes to pay off his loan amounting to 25% of his/her outstanding amount. However, if the applicant chooses to exceed the above said limit, then the bank charges him/her with an interest of 4% on excess part prepayment amount, i.e. on the amount reached after deduction of the eligible part prepayment amount. However, in case of individual borrowers having availed loan under floating rate of interest, the bank does not levy any charge.
18. Rebooking of loans: In case of change in borrowing structure, change of property/asset/collaterals etc, the existing loan has to be rebooked. The bank allows this facility at an interest of 0.5% on the outstanding loan amount, whichever is higher.
19. Change in instalment due date: The bank also facilitates changes in the EMI date. The charges for this service stand at Rs. 5,000 + broken period interest, if any or 0.5% of the outstanding loan amount + broken period interest, if any, whichever is lower.
20. Change of property/collaterals: The bank allows this facility at an interest of 0.5% on the outstanding loan amount, whichever is higher.
21. Re-issuance of Pay order: The bank also extends this facility at a minimal rate of Rs. 100 per instance.

The applicant can also apply online for a loan with the bank. All he needs to do is visit the Paisabazaar.com website and choose apply online tab under the loans against property category. A webpage will open asking for the applicant’s credentials. The applicant needs to fill the required fields with correct information and click on the submit button. On having received an online application and having done the necessary formalities, the bank’s executive will get in touch with the applicant and guide thoroughly in the matter.

EMIs are constructed in such a way that you can pay the borrowed amount of loan back in monthly instalments. It reduces the pressure because you do not have to pay the whole sum in bulk. Therefore, EMIs give you an additional advantage as you have the option of paying in small instalments over the loan tenure to repay the amount borrowed. With EMI as repayment option, the bank enables a broader section of society to realise their dreams of affording things they never thought of such as home, car and other expensive things. By using the EMI calculator, you can find out, your loan repayment requirement and plan your monthly budget accordingly. With EMIs as loan repayment option you have the flexibility to decide the amount you are comfortable paying in a month and the duration for which you wish to make the payment depending upon your income and financial stability.

• Lower interest rate: Kotak Mahindra bank has an excellent reputation in the market for its financial products including its loan against property. The bank provides best interest rates in mortgage loan as compared to other banks.
• Instant citation: A Kotak Mahindra Bank property loan offers you the best choice and loan quotes which will be customised to your online profile immediately by filling a form.
• Simple comparison online: The bank offers you the option of comparing loan overture on the basis of EMI on property loan, interest rate, processing fee, repayment options and other charges. Once you are done with your research, the financial advisor of Kotak Mahindra Bank will provide details of Kotak Mahindra Bank property loan and its benefits.
• Transparent policies: Kotak Mahindra Bank is known for its clarity in banking terms and conditions. This, in turn, helps you make accurate and quick decisions. Nothing is hidden from the customer. The clarity helps build a level of trust which is essential for the customer and also from the perspective of the bank.
• Confidentiality: Kotak Mahindra Bank uses best-powered technology to give their customer the best loan experience keeping in mind the privacy of the customer. You loan application information is kept confidential and never disclosed to anyone else.

Q. How does the bank decide on the amount of loan against property?

A. Kotak Mahindra Bank or any other bank which is lending you the amount looks at your repayment capacity. For calculating the loan amount your income, age, qualification, spouse’s income, assets, liabilities, reliability and stability are considered.

Q. How is the rate of interest for Kotak Mahindra Bank calculated?

A. Interest is determined on daily reducing balance. Your monthly outgo, i.e. your equated monthly instalment, is much lower when the interest is based on annual reducing balance.

Q. What are the loan repayment options available with the bank?

A. Generally, the bank provides you with the option of repaying the loan through EMI that comprises of the principal and interest. Repayment of loan by EMI commences from the month following the month in which you take disbursement.