When to consider a Loan Against Property and its benefits

What is Loan against Property?

Banks and financial institutions also grant loans against your property. This can be commercial or residential property, which you will mortgage with the bank. This is a secured loan and the amount of loan you will get will depend on the market value of the property. Interest rate on loan against property usually happens to be of two varieties – fixed and adjustable. The interest rate on loan against property will depend on the total years for which the loan has been taken.

Taking a property loan interest rate is a viable option for various needs, as follows.

To meet financial requirements of multiple activities: Meeting expenses of important occasions like marriage or higher education can help you tide through the demanding times where the expenses cannot be met by a single or even a double income family in a short time. These milestones can be met comfortably with the help of a loan against your property.

Illness: Having savings to help you tide through a bad patch in terms of health may not be sufficient if you suddenly contract a disease that requires expensive treatment. This can also happen in case you do not have health insurance, or the existing policy is not enough for you and your family. In such cases, a loan against property with its monthly interest can help you in securing good treatment.

House Building: In case you have a piece of property on which you want to build your home to settle down post retirement or move into so that you do not shell out money for rent every month, then this kind of a loan is ideal. The rent can actually go towards the monthly interest payments, which will be more like an investment rather than an expense like rent.

Buying more Property: In case you have your own property and want to invest some surplus money for another piece of property loan interest rate, you can always avail a loan on your property to add to the surplus you are holding on to. This will help you in securing your second or third piece of property with your peace of mind intact.

Personal Reasons: A particularly dry month in business or a period of recession where you have been left jobless temporarily can also drain out your savings and resources. If you are holding on to the hope of finding a job soon or making a business breakthrough, you can easily avail a loan against property so that you can help in supporting the household and your personal needs in the interim period.

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Buying a Property? Check Authenticity through the Encumbrance Certificate

If you are planning to buy an apartment, house or a piece of land, ensure that is clear of any litigation and that is has a clear and marketable title. How do you do this? All you need to do is check the encumbrance certificate. An encumbrance certificate is a document of evidence for free title and ownership.

Encumbrance is a liability on a particular property where it has been used as a mortgage for debt and has not been released from the liability as on date. An encumbrance certificate contains details of all transactions with regard to a particular Loan against property and certifies that there are no legal dues or discrepancies. It can be obtained from the sub-registrar's office where the deed is registered. It is an extract of the register maintained by the sub-registrar. If the particular property is not registered with the registrar, the details, however, will not be recorded in the encumbrance certificate.

An EC is issued for a particular period of time. Any period prior to or following the period mentioned in the certificate will not be covered. It is an important certificate that is required when buying a property, applying for a home loan or taking a loan against a property. Financial institutions and government authorities would usually ask for an encumbrance certificate that is valid anywhere between 13 and 30 years.

All said and done, there are certain property-related transactions that are outside the scope and do not require to be registered under the Registration Act 1908.The property owner need not get the property registered if he deposits the original document in the bank against a mortgage. Another scenario is when the property is given on lease for a period of less than one year. Also, tax liabilities, prior unregistered agreements, oral tenancy, etc. will not be recorded in an encumbrance certificate.

A 'no encumbrance certificate' is a very important document for transactions related to sales and purchase of property. Loan against property are also given after producing this certificate as it would state that the property has not been mortgaged with another lender at the same time.

To obtain a no encumbrance certificate, you need to apply in Form 22 to the Tahsildar with your residential address and stating the need of the certificate. Provide correct information of title, ownership of the property, survey number, address, description of the Loan against property with measurements and boundaries, and submitted to the jurisdictional sub-registrar with the requisite fee. The no EC will be issued after a detailed enquiry, provided there are no entries in favour of a person or a legal body.

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Loan against property

Now Meet All Your Financial Needs with Loan against property

Loans occupy a significant place in the history of India. The connection of loans and the money lenders dates back to the time when India was under the rule of British government. At that time the entire money lending community was considered to be the one responsible for the misery of the borrower class which included peasants and middle class people. Though there was significant improvement in the perception but still people considered the concept of loans to be the cup of tea of only rich and affluent. But the economic renaissance in the early years of the decade of 1990's gave a terrific blow to the old misconceptions and myths about loans. This jolt proved extremely beneficial for the Loan against property.

 It is because people used to consider these loans as risky proposition because there was significant amount of risk involved in it as the loan was available only when the interested borrower can afford to pledge his property. It went on for many years until the above mentioned reformation took place in the early 1990's.

As said above these loans are availed Loan against property, hence the rate of interest that is charged on these loans is quite reasonable. These loans are available for any kind of causes such as medical casualties, any personal causes or for even for education. Hence, these loans are available for both the personal and professional causes. To avail these loans one must should keep few guidelines in mind. These are as follows,

1. The borrower needs to fill and then duly submit the application form. Make sure that the application form is duly attested and properly filled.

2. The person seeking the Loan against property should have sufficient passport sized photographs with him.

3. The borrower must have a proof of signature with him.

4. He should also have a residence address proof such as Voter ID card and driving license. Telephone bills, electricity bills may also serve the cause.

5. The documents of property are must as on the basis of those documents only the loan will be granted to the loan applicant. If the borrower is salaried one then he should have at least last 3 months salary slip. Bank statement or repayment details of any other existing loans.

Hence there are many and separate guidelines for various person to avail these Loan against property. The repayment options too in these loans are extremely flexible. The entire loan is repaid by easy installments or EMI's which are calculated by the money lending authority only after keeping in mind the monthly expenses of the borrower. This thing reduces a lot of burden on the shoulders of the borrower. 

There are many other advantages of availing these loans. First, the person can enjoy several kinds of tax benefits. Second, many banks or lending authorities provide various other kinds of advantages such as the insurance benefits. Also, other type of loan that comes under the same category is the loans against home.

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Has the Rise in Property loan interest rate made You Hesitate as a First Time Homebuyer?

The rise in homebuyer Property loan interest rate is something that a lot of people are talking about. The looming question is: could it be the high rates that are stopping some people from buying their first home sooner? The general consensus is that lack of a down payment is what slows most people down the most as the interest rate doesn't really sink in for many first time buyers until the home buyer is ready to renew for the first time. Many just want to get into the market at any cost so they take a home loan with a higher than average interest rate - but if you are entering the home buyers' market for the first time, it is important to seriously consider interest rates.

Are You Serious About Getting the Lowest Possible Property loan interest rate on Your Home Loan?

The interest rate you are able to qualify for will have a direct impact on the quality of the property and your ability to afford the home you want, and of course it will also impact the duration in which you have to pay off the property. Being as informed as possible will save you money and can help ensure you look as good as possible on paper so that you can qualify for a mortgage. Keep the following in mind:

• Your interest rate does not just impact the overall cost of your new home; it affects your mortgage payment, too. It is worthwhile to shop around for the best Property loan interest rate possible. Crunch the numbers to see and assess the difference.

• Try to look as good on paper as possible. One of the reasons that first time homebuyers often pay such high interest rates is because lenders are unsure about their financial stability. A stable income, some savings, and a good payment history make a big difference.

• Keep in mind that you can pay things off sooner by paying more often than monthly. Fortnightly, weekly, or other accelerated home loan payment options can save you thousands.

• You should look above and beyond your local bank when shopping for a mortgage. Talking to a mortgage broker could be a great way to get more options. Mortgage brokers, for instance, can help you check rates from numerous lenders as well as increase your chances of approval if you are in a lo doc or no doc scenario.

• The bigger the down payment you can come up with, the better.

• It is smart to get a pre-approval before you get your heart set on a property. Knowing what you will be approved for gives you more buying power and will lower the chances of disappointment.

Mortgage Brokers Can Help

Do you want more information to help you as a first time homebuyer? If you want to avail of a Property loan interest rate talk to a mortgage broker. They would be happy to help you review your options so you can get a good interest rate for your mortgage.

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Loan against property

A Fair Trade Loan against property

If you need money really bad and if you own your own house then getting a mortgage might be the easiest way out. They then pledge their property as a security against money lent to clear the debts. This option is common in the west where people are keen on buying real estate properties and cannot afford to pay the full amount within a short span of time. Get professional help in understanding your specific mortgage. There are many offerings out there and all are different.

The mortgage company should be authorized and registered before they start handing out Loan against property. So, before buying a Mortgage, make sure to check the following issues:

1. A mortgage is a long term relationship. So, make sure you know all there is to know about the background of the issuers. You must find out how strong they have been, and what their rate of interest is. Then you must compare the same with other companies to know who the best is. Also, look at how many years the company been in this field. Good credit ratings are another plus as they reassure the person in need of the loan.

2. After checking the issuing company's background, focus on getting all the information you can lay your hands on. The duration and the rate of interest applicable will matter. Make sure you divulge information pertaining to the other financial commitments you have and the time you might require to pay back the Loan against property. Also check about penalties for delayed payments, or possible options if you want to repay before time. If a company is able to accommodate your needs and provide the suitable mortgage, they are the right choice for you.

3. All promises made to you, including any promises of future flexibility, should be documented. Oral promises are not binding unless proven. If the company refuses to sign a contract, they are not reliable or trust worthy, move on to the next company you find. The written document will be legally valid in case either you or the company defaults at a latter date.

4. Other charges that might be applicable from time to time -- If you are able to repay the loan before the stipulated time, the mortgager will charge a redemption penalty, so make sure to have that mentioned in the agreement. In the zeal to make a sale, your agent might actually have "forgotten" to tell you about some specific charges.

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Essentials of Loan against home and should you go for it

Among a host of loan options provided by banks, a relatively popular product is the Loan against property or mortgage. The product clicks with borrowers because it generally allows one to borrow a relatively large sum of money for any need. It generally has easy documentation, speedy approvals and flexible repayment options.

According to the Transfer of Property Act, 1882, a mortgage, which is essentially availing a loan against property is "the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing or future debt or the performance of an engagement which may give rise to a pecuniary liability.

This means one can apply for a loan from a bank by extending the property as a collateral or security. However, as the definition states mortgage only involves "transfer of interest" and the ownership of the property remains with the borrower. Ownership transfers to the bank only in the event of default on the loan.

Loan against home or a mortgage is popular because it has some perceptible benefits. Higher loan amounts are generally available for longer tenure when compared to conventional loans, and at a discounted interest rate. Most banks accept both residential and commercial properties for mortgage.

To fulfill the eligibility criteria banks generally demand proof of residence, proof of identity, latest Bank Statement where you can show a salary / income for the past 6 months, salary slip if employed, and relevant copies related to the concerned property the borrower wants to pledge. If the borrower is self employed, generally the certified financial statement for the last 3 years is needed.

Loan eligibility as usual depends on the borrower's credit rating along with factors like income, age, qualification, number of dependents, spouse's income (if any), assets, liabilities, and continuity of occupation. Once the loan is approved is it either disbursed in full or in installments as instructed by the borrower? The borrower can often choose between fixed and floating rate of interest and generally there is an option for part and prepayment of the loan.

The loan that is extended to the borrower is based on the market price of the property pledged. However, what is important to keep in mind is that a bank always holds bank a certain amount of margin money and they generally extend a maximum of 60 -70 % of the market value of the property. This ensures that the banks are protected against any cyclical fluctuations in the real estate market and a drop in prices.

While people use Loan against home for education and even to buy/build a second property, most mortgage loans are taken for business purposes. This is especially helpful if the business is in need of emergency cash at lucrative interest rates.

It is always risky to put your property at stake, especially if it's your house. This form of loan is also not advisable if you are starting up and there is a substantial amount of risk involved in your business.  Loan against home should not be used as a form of risk capital, but should be used when the borrower knows he would be able to service the loan or repay it before the stipulated period.

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One Loan Plan - Manifold Benefits

As far as unlocking the value of your property is concerned, property sale is not the only option. Mortgage can do the unleashing job for you in the wake of increasing realty price. In the Indian loan market, the option of raising money against property was a choice used largely by the self-employed and businessmen for the liquidity purpose. As the banks in the Indian banking system are getting aggressive in this loan segment, it can be a profitable option even for the salaried professionals. In the recent years, raising finance through the equity of Loan against property too has become much more refined and the interest rates have turned attractive keeping the benefits of the borrower in mind.

A number of banks, particularly private and the multinational are aggressive in this Untapped and unbound loans against home or property. The maximum loan amount that can be sanctioned to the borrower depends on the value of the property and banks are less hesitant when the loan size is below 60 per cent of the market value of the property. Such loans offer the overdraft facility to the borrower. In case of overdraft the interest burden depends on the usage of funds.

Loan against property can also be the profitable option even for those who are looking for their second or third immovable property. Generally, banks do not worry about the end use of the property(whether for rent or sale) and such loans were given to make your presence felt in the highly profitable real estate market. These loans can also be available for funding educational requirements or any other large expenditure . Now, with the increasing competition in this segment and the liberal terms of RBI(it is not wise to count the recent Repo and CRR hike as they are only short term in nature)interest rates showing signs of stability. So the property owners can use this loan option for investing in another property.

The advantage is more so when the prospective buyer falls short of margin money for his purchasing the second property. Besides the property owner, other borrowers in the form of co-applicants too can also use the mortgage option, subject to certain terms and conditions. Another big advantage with the loan against property is that it can be utilized even when a home loan is in operation. For example, if a property owner has taken a home loan for the purchase of an immovable property with a tenure of 10 years, he can re-mortgage the property with the same bank for utilizing the loan later.

No doubt, mortgage loan too is a Loan against property but it cannot get any tax benefit for the borrower. The income tax benefit under Section 24 is confined to the home loans only. However, the interest component may increase when the borrower is not a salaried employee. Borrowers would be better off if they keep an eye on their repayment capabilities before going in for the loan against property. Analyze different components of the loan and then go for the loan plan according to your need.

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Loan on property Investment

The main topic for this article is property investment. As we know, banks have progressively tightened their lending criteria in the wake of the GFC, investors are getting frustrated because they can't source finance for their next purchase. In this article, I will discuss about ways to break through the credit ceiling and increase our serviceability limit.

The first step which is consolidates unsecured debts into your mortgage. Typically, unsecured debts such as credit cards and personal loan have short repayment period. This method is use to force us to reduce our debts with high cost monthly repayments. These high repayment levels will cause the bank's ability to repay calculation for our mortgage. The reason is because unsafe debt will limits the amount of uncommitted funds we have available to repay the proposed mortgage. Rolling our personal loan and other debts into our mortgage can help us because they won't show as other financial commitments. Anyway, it will stretch the debt over the life of your Loan on property term, creating more interest in the long run.

The second step is by reducing excess credit, especially Loan on property. It is believe to say that if we have any credit cards with limits that exceed our need for credit, action that will be received either cancel the limits or reduce the limits down to a manageable level. When there are lenders assess our ability to repay a mortgage, they might assume that our credit card will be fully drawn up to its limit.

For knowledge that most credit card supplier make a statement that three percent of the debt amount be repaid every month, the unused limits can be detrimental to your mortgage borrowing capacity Loan on property. Every $100 in credit card limits adds $3 per month to our monthly expenses and reduces our ability to borrow.

It may sound very good but all the lenders will look at the credit limit on our card or cards as a liability that we may have in the future, even if we don't owe a solitary cent currently.

Currently, if we have a card with an $800 limit and another with a $400 limit, a lender will write down $1200 as a debt under our name. Reducing our credit card limit by $1000 may increase your calculated monthly disposable income by $30, which has the effect of having a net pay rise of $360 per annum."

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All Purpose Loan - Loan on property

Loan on property is an all purpose loan. A loan can be taken for any purpose in the time of financial emergency.  There is personal loan but it is tagged with a high interest rate along with short loan repayment tenure. Therefore many people are not able to take personal loan. If you own a house you can take loan against and it turns out to be cheaper than a personal loan. The reason behind this is the lender has the mortgaged property as security with it therefore there is no tension of defaulter of loan amount. While in the personal loan there are no such security norms.

The Loan on property has a long repayment period, generally 10 years. The loan can be taken for any financial requirement whether it is for funding of the existing business in case of debt consolidation, any emergency, education, marriage or other constraints. In case of personal loan you have to specify the reason for taking loan but in this loan there is no such rule but if your loan amount is Rs 25.00 lacs and above then you have to specify the purpose of the loan.

For instance the country's largest public sector bank SBI has a clause that the loan can be taken for any purpose what so ever. In case the amount of loan is Rs 25.00 lacs and above then purpose of loan will have to be specified along with an undertaking that loan will not be used for any provisional purpose whatever including speculation on real estate and equity shares.

Some of the banks give the loan against both types of properties whether residential or commercial but some of them give loan against only the residential property. The loan amount can range from Rs 10 lakhs to Rs 3 crores, though the amount varies from lender to lender.

Some of the banks offer special schemes along with this loan like free personal accident insurance cover.

To get this loan you must be above 21 years of age and the maximum is 60 years, whether salaried of self-employed. For instance the largest public sector bank the State Bank of India has the following eligibility criteria - an individual who is: an employee or a professional, self-employed or an income tax assesse or engaged in agricultural and allied activities. Bank has fixed the maximum age limit to 60 years.

Though, some banks have fixed the maximum age limit for self-employed individuals to 65 years. The salaried applicants should be employed continuously for at least three years.

Documentation

Self-employed individuals can submit computation of income for the last two years certified by a charted accountant.

In this Loan on property there is a facility of an overdraft. Some banks offer this facility. The big advantage of taking this loan using the overdraft option is that the borrower has to pay the interest only on the money withdrawn, till the time loan is repaid.

While in the normal course the interest is paid on the entire amount throughout the tenure of the loan.

Before finalizing a bank check for the fees and penalties. Banks charge processing fees - is the amount charged by banks to cover the cost of processing your loan. The amount range varies from bank to bank. The fee amount is generally between 0.25 to 2%. The foreclosing of the loan before the actual tenure carries prepayment penalty.

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Loan on property- For Greater Flexibility and Freedom

Each one of us needs money at one or the other time in our life. You may wish to buy a new home. One can fulfil his or her personal desires by withdrawing money from the savings account. But, do you think it is right to withdraw the savings when an efficient alternative is available that is taking a loan from the loan market. You can use the savings in future when some emergency occur. Now, the question arise that which loan to choose from the infinite number of loans existing in the market. If you own a property or want to buy one, Property loan will be the perfect option for you.

Loan on property are secured against a property. Property put as collateral can be a residential or a commercial property. The loan providers grant more flexibility to the borrower and freedom to use the money as they wish. A borrower can use a property loan to buy a new car or to pay for much needed home improvements.

Loan on property offer borrowers the opportunity to enjoy the benefit of flexible repayment option, low interest rate and a longer repayment term. Property loans are available with the term facility of up to 10 years. The rate of interest on a property loan is low as it is a secured loan.It accounts for a low monthly instalment which is much cheaper than the personal loans.

Commercial property is the property which is used for business purposes. It is commonly known as business property such as office buildings, stores which are intended to operate with a profit. This loan is similar to secured business loans.

Property loans are generally allowed against a residential property. When a borrower puts his home as collateral against the loan, the property loans take the form of a mortgage. A property loan secured against a home is specifically designed to facilitate the UK residents to provide financial support to them so that they can purchase a home. This type of property loan is popularly known as residential property loan.

The amount you can borrow with a loan against property depends on the equity in your property. Equity is defined as the difference between the market value of the property and the claims held against it.

There is one drawback of a property loan. It involves the risk of repossession for a borrower. The lender will repossess the property kept against the loan if the borrower defaults on the monthly installments or the loan amount.

A bad credit rating cannot stop you from borrowing a Loan on property. You just need to put your property as collateral to borrow money from the loan market. So people who have faced county court judgments or bankruptcy can also apply for this loan.

There are number of lenders who provide loan against property. With the technology growing day by day, entry of the online lenders has widened the growth scope of the finance market. Banks and financial institutions are now identified as traditional lenders. Online lenders give the convenience of applying for an online loan and try to keep you away from all the hassles. You can apply for an online Loan on property from your home or office's computer which is equipped with internet.

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Home Equity Loan Interest Rate - Getting the Best Deal

Many home owners today are choosing to catch up on major expenses by seeking a home equity loan. The home equity loan interest rate that you are able to obtain will make a huge difference in the amount of money that you will be repaying over the term of the loan. In order to get the best possible deal, here are some things to consider.

What is a Home Equity Loan?

It is a method of financing whereby a homeowner borrows an amount based on the difference between the market value of the home and the amount still owing on the original mortgage - if any. An equity loan on your home may also be known as a second mortgage or borrowing against the property. The loan may be received as cash, payment of bills, line of credit or as collateral for other property.

Where Can I Find the Latest Information?

In the past, home loans were often issued by banks, savings and loan institutions or other mortgage lenders at the local level. Today, there are many equity loans available through the Internet. These loans may be associated with private or large commercial lenders. They may specialize in second mortgages or be available from a regular mortgage lender.

What Factors Affect the Interest Rate?

Many factors affect the rate of interest that will be charged on a home equity loan. The creditworthiness of the homeowner is just one example. The amount of collateral accrued in the home is also taken into consideration. There is often a cap placed on the loan-to-value ratio of the second mortgage. The term of the loan and the size of the loan will also affect the rate of interest charged.

Fixed Rate or Variable Rate?

A fixed interest rate is one that is determined at the beginning of the loan period and remains the same throughout the loan. It tends to be somewhat higher than a variable interest rate. A variable Property Loan Interest Rate

is one that can be adjusted up or down during the repayment period. The adjustment is usually based on an outside factor such as the prime lending rate.

Uses for a Home Equity Loan

This form of finance is usually an option considered when the homeowner has upcoming major expenses and needs cash or credit. The loan may be taken to pay for major improvements on the home that will increase its value. It is sometimes used to pay for college expenses or for catastrophic medical bills. Another common use for the loan is to pay off credit card bills with a higher interest rate.

Loan Term

The loan term is the length of time allowed for repayment of the loan. It may be as long as 25 or 30 years in some instances, or a short as two or three years. The lender is usually willing to structure a loan so that you can afford the payments within your budget.

Before choosing additional loans or credit of any type, you should make sure that it is the best fit for your long-term financial needs. By seeking the best home equity loan interest rate, you will pay less money overall. You will be on a better financial footing so that you can pay the loan off more speedily.

Most people don't realize that fixed home equity loan can save them money as well as freeing off some cash. If you can obtain a home equity loan refinancing you can often save a small fortune in interest charges over the period of the loan. Visit our website to get free information about the pros and cons of home equity loans.

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Investment Property Loan Types

An investment loan on property is a loan for non-owner occupied property. There are two main classifications of investment property mortgages. These classifications include: commercial and residential. A commercial property mortgage is for a dwelling that contains 5 or more units and/or is zoned as commercial. A residential investment mortgage is for a dwelling that is one to four units and is zoned residential. Commercial and residential mortgages are two completely different loan types and have significantly different qualification standards. The following is a basic description of each mortgage type.

Residential loan on property

Residential property investment mortgages have similar qualification guidelines as standard owner-occupied mortgages. Although, they do have higher down payment and credit score requirements. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Score Requirement - The minimum credit score requirement is typically 680 or above for investment mortgages.

• Debt to Income Ratio - Typically, the debt ratio limit for an investment mortgage is 40% of the borrower's verifiable income. Besides W2 income, the borrower's last 2 years tax returns will be needed to calculate the income that can be used from other rental properties or other sources of income.

• Down Payment - Investment property mortgages require at least 15% down, but the down payment requirement increases with lower credit scores and the greater the number of units in the property.

• Income - Lenders typically will only use rental income if the borrower has a two-year history of owning rental properties. This is usually documented via the tax returns and schedules.

Commercial loan on property

Commercial loans typically have higher rates, greater fees, and shorter terms than residential mortgage. The two most important factors for lenders on this loan type include: a positive cash-flow for the property, and the borrower's past commercial property management experience. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Scores Requirement - The minimum credit score requirement is typically 720 to 740 for a commercial loan.

• Down Payment - The minimum down payment for a commercial mortgage is typically 30% or greater. When refinancing, the maximum equity position is usually 70% of the appraised value of the property.

• Debt Service Coverage - This is a ratio used by lenders to calculate the property's ability to generate cash flow. It is a calculation comparing the net operating income minus the mortgage payment and the other debt payments.

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How to manage your finances with the property you own

Savings is our part of life. Right from childhood our parents teach us the value of savings time-on-time basis so that you utilize it during any emergency in future. No matter how meticulously an individual saves, at times when your finances are strained you’ll need some help to tide over safely on to the shore. Borrowing from family or friends is an alternate option but again there is fear of rift is associated if not paid on time. If the money you need is large such as for child education, sending them for higher studies, medical treatment, or other emergency it becomes stressful to manage finances. Relax! A better option would be to leverage an asset you own – your house.

Today, leading banks and finance companies offer loan against property (lap) so that you can use your house as collateral to take a loan from a bank.  LAP is given against the mortgage of property. It is provided at a certain percentage of your property’s market value. It usually stands around 40 to 60% of your property value in the market. Property loans help you leverage the economic worth of your home along with continuing to enjoy occupancy of the same, so that you get immediate finance to meet a variety of personal and business needs.

Loan against property are avail for fully constructed, freehold residential and commercial properties for: business needs, marriage, medical expenses and other personal needs. You may also transfer your outstanding loan availed from another bank / financial company.

In today’s time traditional finance come at extremely high rate of interest, stringent measures to pay and less time duration to clear of the debt. But taking a loan against property is certainly cheaper than a traditional loan, where interest rates are as low as 10 to 13%.  Since these are secured form of loans you can get a higher amount than the one you will get for an unsecured loan like a personal loan. Ofcourse, every bank will also have small processing fee of around 0.50% of the loan amount. For better understanding you can always visit relevant site and make sure the mandatory documents are available at the earliest for application.

The loan offered by a bank will vary from person to person since it depends on various factors, including the work profile and age of the borrower. Typically, the income proof for three years is required to have the loan against property and the minimum age is around 24 years. Lenders prefer that the loan be fully repaid while the borrower is employed, so the maximum age till loan maturity in case of a salaried person is 60 years and for self-employed its 65 years.

Your credit history counts a lot when it comes to avail property loan. It is extremely important that you have a good credit score rating to avail any form of loan. Before, lending out the loan, banks have a background check of your credit history through a Credit Information Company like CIBIL (Credit Information Bureau India Ltd.) and go through your repayment track record. Based on your credit score banks will ascertain your repayment capacity. Your defaulting on any bill payment will reduce your chances of getting a loan. After the bank is satisfied with the paperwork, it will offer you the loan, which will typically range from 40-70% of the value of the property.

Home Loan

Property Loan

Avoid guesswork while planning for your future

Last week, I interacted with a group of investors at an event. Almost all of them had made a substantial amount of investments, mostly of the tax saving kind. More than half had investments in equity funds of one kind or another. 

However, an interaction with one investor stuck me as particularly interesting. In about an hour of analyzing his investments, he swung from being vaguely unhappy to supremely confident to somewhat scared about the future

My friend, who is in his mid-40s, had been investing in mutual funds for about 20 years. In all these years, he and his wife have invested different amounts -- mostly equity funds -- in a sporadic manner. Most of the investments were around Rs 20,000-30,000 at a time, although less in the earlier years.

They've never kept a precise track of how much they invested and what the gains for. Still, unlike many such investors, they had dumped all the paperwork and statements in two big box files and  kept them safely .They had a vague notion that in all these years, he had invested about Rs 20-30 lakh, most of it in the last decade, and that it was worth around Rs 50-70 lakh.

Finally, one day, with a few hours of hard work to organize everything, they got to know what exactly was happening with their investments. Look for Property Loan Interest Rate to their pleasant surprise (actually, wild joy), it turned out that the investments were worth almost Rs 2 crore. The power of equity investments, and of compounding over long periods of time, had created a bonanza.

The net result of all this was that my friends' outlook on life took another U-turn. From feeling prosperous and thinking about German cars and Italian evenings, they started feeling seriously worried about the future. At their current rate of saving, they just wouldn't have enough money for all the expenses, as well as sustain themselves after retirement

Even if they worked till 65, they would have another 25 years of expenses to sustain. Even a rough calculation of inflation and expenses over a quarter of a century is a frightening experience.

Some of us understand the magic of compounding on investments, but very few manage to apply compounding to expenses and inflation and then get a feel of what that means for their own future.

[Source: http://economictimes.indiatimes.com/wealth/plan/avoid-guesswork-while-planning-for-your-future/articleshow/53906154.cms]

Property loan interest rate- Loans at Lower Interest Rate

Perhaps, people who are desperate to purchase or construct a new house will definitely do it this time. Opportunity is knocking at your door and you just need to welcome it.

Bank has just declared that the state owned bank decided to reduce its prime lending rate to a great extent i.e. by 75 basis points from November 10, 2008. But, the Banks have already cut their lending rates. However, Banks are yet to cut off the lending rates.

The oriental Bank of Commerce has cut its lending rate on home loans up to Rs. 30 lacs. The Bank has also reduced its lending rate on education loan. Of course, this venture on the part of the banks are going to be very beneficial for the prospective borrowers of loan who have been since long cherishing the dream of purchasing real estate in India. The availability of the housing loans in the country is one of the main factors behind the boom in the real estate industry in India. This loan can be obtained not only for construction of new house but this loan can also be utilised to renovate or extend a house or even purchase real estate or pay the stamp duty. Besides the aforementioned banks there are other financing companies in the country like HDFC who offer loans. These banks also offer home loan to enable people to realise their dream pertaining to real estate at decent rates.

Whenever, you consider Property loan interest rate one has to have good knowledge of the rate of interest that are being taken from the borrower in return for the loan lent. This rate of interest is classified into two types which are fixed and floating. There are different kinds of clients in the loan market. Some would like the fixed rate of interest whereas; there are others who would like to have the floating rate of interest. Both the rates do not have identical repayment structure. If you have adopted the fixed rate you will have the same stable rate of interest throughout the loan repayment period. However, a borrower must make it a point that he does not delay any instalment. Otherwise, the borrower may have to bear the penalty for delay. On the contrary, the floating rate is not stable or does not remain same during the repayment term. It does fluctuate and one has got to bear the rise in its rate. But, the floating rate is suitable for you only if you are able to pay off the loan quickly. This rate will also suit you if you are capable of making additional repayments.

Clients of housing loans must also be aware of the hidden charges, if there is any. At times, it is also found that there are a lot of restrictions associated with a loan when its Property loan interest rate is low. An individual must make it a point not to delay any instalment as such an act on the part of the borrower may lead to penalty in the form of extra cost.

Source: http://EzineArticles.com/1767831

What Are the Factors That Affect Mortgage Loan Interest Rate?

Mortgage loan interest rate can be defined as the interest rate on mortgaged properties generally advanced to secure a loan. When you're shopping for a mortgage loan, you may usually want to get the best rate. Interest rates depend on the economy. Even so, you can do some things that will make it easier for you to get a better interest rate. There are certain factors to get a good mortgage loan interest rate.

Firstly, the best interest rates are given to those with the highest credit scores. So, you may want to improve your credit score. You may get the best help from a mortgage broker. Why, because, a good mortgage broker has access to multiple lenders and can more easily find you a lender that will offer you the best rates.

For the best rate mortgage loans, it is best to apply for a loan and lock the rate during a dip in interest rates, when possible. You can update yourself about the latest interest rate news and trends. A good mortgage interest rate is ideal, but only if it also provides you with an affordable mortgage payment. For example, you could get a better interest rate with a 15-year mortgage but the payment will be much higher than a 30-year mortgage.

When buying a home, it may be useful to check and compare Mortgage Loan Interest Rates to get the best possible rate. Using a mortgage interest rate calculator can help you make logical decisions on purchasing your next residence. The first and foremost step is probably to identify the type of loan you are choosing (i.e. fixed, adjustable rate, interest only; etc.). You may gather information about the original loan amount you want to finance along with the estimated interest rate and term of the loan.

These three data elements are the basic requirements for any home mortgage interest calculator you may decide to use. 

Then you may run your home mortgage interest calculator using the required data to project a monthly payment. You can try running multiple scenarios using different numbers and document each result and compare your results from running the home mortgage interest calculator. When you are comfortable with a certain type of loan, it is probably time to submit the paperwork to a bank or other lending institution to get approved financing.

People often wonder why there is always a constant change happening to mortgage loan interest rates. Numerous factors come into play when determining the interest rate you'll pay on a home loan. The higher the percentage of the purchase price that you can afford to make as a down payment, the lower will be the interest rate. Similarly, the more of your closing costs you're willing to pay for, the lower the interest rate you're given. The monthly payments on a shorter term loan are generally higher than those of longer term loans. However one of the best ways to save money overall on the costs of buying a home is to strive for as short a loan term as possible. Your credit rating and income level are enormous factors considered in determining the interest rate offered to you on a home loan.

[Source: http://www.sooperarticles.com/finance-articles/mortgage-articles/what-factors-affect-mortgage-loan-interest-rate-199435]

All Purpose Loan - Loan Against Property

Loan against property is an all purpose loan. A loan can be taken for any purpose in the time of financial emergency.  There is personal loan but it is tagged with a high interest rate along with short loan repayment tenure. Therefore many people are not able to take personal loan. If you own a house you can take loan against and it turns out to be cheaper than a personal loan. The reason behind this is the lender has the mortgaged property as security with it therefore there is no tension of defaulter of loan amount. While in the personal loan there are no such security norms.

The loan against property has a long repayment period, generally 10 years. The loan can be taken for any financial requirement whether it is for funding of the existing business in case of debt consolidation, any emergency, education, marriage or other constraints. In case of personal loan you have to specify the reason for taking loan but in this loan there is no such rule but if your loan amount is Rs 25.00 lacs and above then you have to specify the purpose of the loan.

For instance the country's largest public sector bank SBI has a clause that the loan can be taken for any purpose what so ever. In case the amount of loan is Rs 25.00 lacs and above then purpose of loan will have to be specified along with an undertaking that loan will not be used for any provisional purpose whatever including speculation on real estate and equity shares.

Some of the banks give the loan against both types of properties whether residential or commercial but some of them give loan against only the residential property. The loan amount can range from Rs 10 lakhs to Rs 3 crores, though the amount varies from lender to lender.

Some of the banks offer special schemes along with this loan like free personal accident insurance cover.

To get this loan you must be above 21 years of age and the maximum is 60 years, whether salaried of self-employed. For instance the largest public sector bank the State Bank of India has the following eligibility criteria - an individual who is: an employee or a professional, self-employed or an income tax assesse or engaged in agricultural and allied activities. Bank has fixed the maximum age limit to 60 years.

Though, some banks have fixed the maximum age limit for self-employed individuals to 65 years. The salaried applicants should be employed continuously for at least three years.

Documentation

Documents required for applying for loan are:

Proof of identity (passport, driving license etc).

Proof of residence address (passport, electricity bill etc), and proof of age (birth certificate, school leaving certificate, passport etc).

Salaried individuals must submit their latest acknowledged IT returns or bank statements for the last three months.

Self-employed individuals can submit computation of income for the last two years certified by a charted accountant.

In this loan there is a facility of an overdraft. Some banks offer this facility. The big advantage of taking this loan using the overdraft option is that the borrower has to pay the interest only on the money withdrawn, till the time loan is repaid.

While in the normal course the interest is paid on the entire amount throughout the tenure of the loan.

Before finalizing a bank check for the fees and penalties. Banks charge processing fees - is the amount charged by banks to cover the cost of processing your loan. The amount range varies from bank to bank. The fee amount is generally between 0.25 to 2%. The foreclosing of the loan before the actual tenure carries prepayment penalty.

Some banks charge this as a percentage of the outstanding principal of the loan amount. Therefore study all the features and terms and conditions carefully.

Article Source: http://blogs.rediff.com/loanagainstpropertyindia/2016/08/17/all-purpose-loan-loan-against-property/

Loan Against Property or LAP

A loan against property (LAP) is precisely what its name implies - a loan that is paid out against a property mortgage. The loan is offered in relation to a specific percentage of the market value of the property, which is approximately around 40-60%. In India, LAP is categorized under the 'Secured Loan' group where the borrower shows his property as the security, which can be a self-occupied ownership property or a rented out property (both residential and commercial). It's not necessary for the property to be a constructional structure. It can be a piece of land as well.

LAP usually comes with an interest rate of 12-15.75%.

In India, maximum tenure offered for a LAP is 15 years.

Starting the process

If you want to take a loan against property, the first thing you need to do is to shop around for a lender. Use the internet to learn about the eligibility criteria of a LAP and this is likely to vary from one bank to the other. In general, most banks would ask for the following -

Your income/savings details and also information of the debt obligations that you have

Cost of the property that you intend to mortgage

Your credit record

Repayment track record of loans taken prior to this

Steps involved-

Application: The loan application sets the ball rolling in a LAP. Select your lender and fill up the loan application form with necessary details.

Processing: After you apply, the bank starts processing your application, whereby the loan procedure starts moving. Your lender can also call you over for a discussion. Carry original documents with you when you go for it. Following this, the bank will conduct a field investigation of the matter and verify the documents presented by you. Documents required are usually income proof, age proof, address proof, identification proof, property papers, and employment details. When you submit your credit documents to the bank, you might have to shell out a processing fee as well, which is 1-2% of the desired loan value. The bank can also ask for an upfront fee for miscellaneous expenses.

Loan sanction: Once the bank has verified your financial credentials, it will work out a loan eligibility amount for you, which is put up in an offer letter along with terms and conditions and mailed across to you. You can accept the loan if it fits your bill by putting your signature on the acceptance copy.

Legal check and valuation: The bank will now conduct a legal check on the property that you intend to mortgage and evaluate it. Keep the property papers and No Objection Certificates (NOCs) ready for scrutiny.

Loan disbursal: If everything is in place and the bank is convinced of your loan repayment capacity, it disburses the loan through a Demand Draft (DD) or a cheque.

When you plan to take a LAP, consider your pay-off capacities very well, as, if you are unable to pay it back in full, you stand at the risk of losing your mortgaged property to the bank.

Article Source: http://blogs.rediff.com/loanagainstpropertyindia/2016/08/13/loan-against-property-or-lap/

Taking the Home Loan Path: 5 Common Mistakes

You may choose to take out a home loan when buying a property for a number of reasons. It could be because you do not have that kind of money and you can earn well enough to pay off your EMI, or it could be that you have the money but you want to use it to make more money and faster than the interest rates. Whatever the case may be, if you plan to take out a home loan, you are prone to a couple of pitfalls.

Once you are aware of these five common mistakes, you will have a better idea of how to go about taking the home loan path to buying your house.

Ignoring Your Cibil Score

Cibil is an agency that rates your creditworthiness, as in, they give you a score out of 900 to indicate how much should banks trust you in loan matters. Knowing this score can be a bargaining tool for you. If you have a good score, one that is above 700, it will give you more options to negotiate for better loan terms. You can ask Cibil directly to provide your Cibil score to you.

Applying for Other Loans as well

So you're looking for a home loan but are simultaneously applying for other loans as well, like personal loans and credit cards. It does look poor on you as you'll look 'Credit Hungry' and Cibil and the banks will usually blacklist you as a financial risk. When taking a Loan against Home, make sure you free up all other loans six months prior and just focus on the home loan.

Picking the Wrong Bank

It is easy to just go with the bank you are most familiar with, when the truth is that you could have found a better deal elsewhere. Do not shy away from looking for more options. Go to as many banks as you can and even ask your friends and family which bank they chose for their loans and why. There are more factors to consider than just offered interest rates, such how their services are, what their system of calculating fluctuating interest rates is, etc.

Ignoring Pre-Approval from the Bank

Do not ignore the pre-approval on your loan as banks offer it willingly and for free. Getting a pre-approval from your bank will cut down on the overall time, and makes the processing of your loan much easier when the time comes.

Getting Attracted to Big Loans

Bigger is not always better when it comes to home loans. Just because a bank offers a bigger loan doesn't mean you should take it. Sure, you could buy a bigger house, but you will also carry a bigger burden. When taking a home loan, your goal should be to nullify it as soon as possible. So get a lower home loan, pay a higher EMI for a shorter tenure.

[Source: http://ezinearticles.com/?Taking-the-Home-Loan-Path:-5-Common-Mistakes&id=8519786]

Be Sure on Choosing Your Home Loan Lender

Investment strategies in the real estate sector are becoming popular in the recent times. However these deals require hard work as there are lots of hassles that are involved while dealing with the real estate agents, lawyers and potential buyers. Above there is a need for huge amount of funds before finalizing on a real estate deal. Thus it is always better to a have good market survey prior to your property purchase.

Going on the fund side, there are many banks and housing finance companies that offer home loans which are easily availed. But to do a bit of market research is beneficial as it will keep you well informed about the changes that will you help in getting flexible loan terms and low interest rates. A good online research on home loan comparison would prove useful on deciding the best lender for you.

Today the market is floated with a number of home loans that are offered both at fixed and floating interest rates. Fixed rate home loans are availed with a view of fixed interest rate over the loan tenure. If one opts for this category of home loan then he need not worry about fluctuations in market interest rate.

Fixed rate Property Loan is not dependent on the rise in interest rates. On the other hand, there are floating rate loans where the interest charged varies with the market interest rate. These loans are also known as variable or adjustable rate home loans which generally start with both low interest rate and low EMI. But with a rise in interest rate, your monthly payment-EMI- also rises.

Buying a home is what everybody aspires today and arranging funds for the same is not a difficult task but to get the best deal may be tough. The competition today is rising with an increase in the number of banks and financial companies. These institutions are offering loans that are convenient in repayment through various options of monthly installments. All of them make every effort to provide the borrower with the best service.

These organizations are also offering additional facility now-a-days. Even if you do not have a good credit history, you can opt for home loans. So you need not fear about a loan being sanctioned due to your late payments, bankruptcy, discharge, etc. However these loans are offered at higher interest rate to customer with bad credit history.

So one just needs to sit in front of a computer with internet and compare the rates and services provided by the different lenders in the market. You can just compare the various quotes and find out which one cost you less.

This method is appropriate for people who dream to own a home. Online research facilitates you with various loan options and thereby helps in choosing the right option for you. So with high-speed internet access available with ease, searching for a home loan is no more a difficult task.

A proper comparison between the rates and schemes offered by differ lenders will definitely prove beneficial at a time of your property purchase.

[Source: http://ezinearticles.com/?Be-Sure-on-Choosing-Your-Home-Loan-Lender&id=1701160]

Homeowners Loan for Home Improvement

It is a common public perception that when you apply for a home loan or housing loan, you will need to build up a house or purchase a new property. However, lenders are now offering a homeowners loan that borrowers can avail of to improve the house that they live in.

Here are some of the frequently asked questions and answers when it comes to homeowner’s loan.

What is a Homeowners Loan?

A homeowner’s loan is made available to home owners who want to do maintenance work on their houses. Maintenance work include: repairs, landscaping, expansion of their property, installation of swimming pools and any other improvement that can be done on the property that will increase its value.

There are several types of homeowner’s loan which include: refinancing solutions, loan grants, personal loans or unsecured loans, first mortgage loans and second mortgage loans also known as home equity loans.

Refinancing solutions are usually the best option that homeowners can avail of. If you refinance your mortgage, you can lower your monthly amortization payments and possibly receive cash for home improvement purposes.

Unsecured loans or personal loans are given to individuals who do not want to put their properties as collateral against the loan they want to have released. Usually banks and other financial institutions will extend this kind of loan.

First Property Loan is usually given alongside home improvement loans. This type of loan is usually availed of during the term of the initial mortgage.

What are the requirements needed to apply for a Homeowners Loan?

If you apply for a home owners loan from banks and other lenders, be sure that you know the specifics of your house improvement. Details are needed such as the estimated cost and an improvement plan will also be handy.

Who are qualified to get the Homeowners Loan?

It usually depends on the lending agency but most of the time a good credit score is needed to get any loan and that includes the home owners loan.

For low-income families, the government usually grants special housing assistance for potential house repairs. These government agencies also help the low-income families with issues regarding home ownership and community development. Also, some non-government agencies give special assistance when it comes to repairing houses brought about by disasters.

For individuals who want to avail of a homeowner’s loan, they must keep in mind the amount of income they are earning. Debtors should always keep in mind their ability to pay in applying for any kind of loan. Do not make the mistake of entering into a loan and realizing halfway that you cannot meet the required payments that you agreed to.

Make sure that you understand every clause and agreement that you enter into while signing the loan agreement. It is a financial obligation that can have legal repercussions if you default your payments.

As a tip, scout several home owners’ loan providers and choose the one with the best package that you can manage and pay off depending on your present financial capability.

[Source: http://ezinearticles.com/?Homeowners-Loan-For-Home-Improvement&id=1448044]

Backing Up Your Loan with Property

Yes. Most lenders will require you to give them a contact address. But let's ignore that for now. If you actually happen to own your home then clearly you are unlikely to up sticks and leave with your creditor trying to work out where you, and more importantly to them: their money, have gone to. If you want to get an affordable loan, the secured loan would be the best way to go. Not only does it mean to the creditor that you are easy to contact, it also shows that you are far more likely to be a responsible borrower of money. Bearing in mind that most homeowners either have or did have a mortgage at some stage, they will likely have had to make monthly (or otherwise) repayments in the past, so it gives the creditor a sense of comfort that, based on past results, you're more likely to be a trustworthy borrower.

But what if you are not a homeowner? How your loan securing chances would be affected? Given that you're living somewhere relatively permanent, but don't actually own the property yourself, you may find that you lack much to secure your loan on. What's the problem with this? Well, let us say that you do not own any property. What this shows is that your financial standing is a lot lower than that of somebody who does. This means that, should you end up - despite your best efforts and intentions - getting further and further in to debt so that you're unable to pay back the Loan on Property , you have little to act as a buffer (like your property) with which the creditor can start looking at. The lender will regard you as being a high risk candidate if you do not own property. So how do they make up for that?

What they do is that they charge you a significantly higher level of interest. And later, should things start going wrong, they will probably be a lot less understanding. So, inversely, if you actually happen to be in the position of owning a home, you are a far more stable and likely candidate for the creditor's best loan deals.

And what if your home is owned by your partners? In that case, it can sway the balance just enough if your credit record isn't without its patchy areas. If that's the case, you have two simple options to taking out a loan to make the most of that fact. Ensure that the creditor is aware of whom you happen to live with (and that they own the home, not you); or simply ask them to take out the loan for you. The latter might be a good idea even if you could get the loan on your own steam. After all, your partner could get a better deal.

In the long run, it's all down to who's willing to sign on the line and what they have available to back up their loan with (combined with their credit history). Bear that in mind when trying to find quotes for relatively small loans in future. There are many ways in which you can get hold of a cheaper loan. Stay open to various options.

[Source: http://ezinearticles.com/?Backing-Up-Your-Loan-With-Property&id=871915]

Refinance Your Property Online

By refinancing your property online you can take advantage of competitive rates in the convenience of your home. You should consider refinancing your property if interest rates are lower, your financial situation has improved, or your credit rating has improved. Once you are ready to refinance, search for lenders' rates online for easy comparison shopping.

When to Refinance

Lower interest rates for mortgage loans are a prime time to refinance, but there are other times to consider refinancing too. For instance, if your financial situation has improved through a higher salary or extra cash reserves, then you may qualify for lower interest rates even if rates for mortgages in general haven't fallen. The same applies for improved credit ratings.

In addition to lowering rates, you can also withdraw equity from your property to invest in land improvements or pay off high interest credit cards.

Finding Lenders

Lenders' rates vary as much as 5% between financing companies, so it makes sense to shop around. Online lending websites allow you to quickly compare rates through general quotes. For an actual refinancing quote, you will need to provide more detailed information, but general quotes will give you a rough idea of who is the most competitive.

Besides comparing rates, look at lenders' fees and points. These hidden loan costs can mean the difference of thousands of dollars. When comparing Loan against Home , add the interest you will pay over the course of the loan and all fees and points to get the total cost of the loan.

Requesting Quotes

Once you have picked a handful of potential lenders, request actual loan quotes from them. Online lenders will require you to fill out a detailed questionnaire, providing information about you and the property. Job history, property location, and other details are all factors in determining your refinancing rates. Requesting refinancing quotes will not lock you into a loan, but will ensure you are getting a competitive financing package.

Applying Online

You can finish the refinancing process online by completing your application through the lender's website. Typically, if you have received a detailed quote, your application is practically finished. Once you have given the go ahead, the lender will send out the final paperwork for your signature and approval. The loan process from beginning to end usually takes less than six weeks.

[Source: http://ezinearticles.com/?Refinance-Your-Property-Online&id=49443]