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Home Equity Loans

Home Equity Loans help you encash the present market value of the property by taking a loan by mortgaging the property. Home equity loans in India are common among the service sector. The home equity loan program differs from state to state. The loan is a personal secured loan given to all legal resident and non residents of the country. It is not necessary that the loan should only be used for the purchase or construction of a property development. The home equity loan in India can be used for any personal purpose to further personal merit, occupation, consumption, family income and standard of living. The only caveat being that all causes for applying for the loan should be within the framework of the law of the country. In this regard the home equity loan in India encompasses reasons.

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» Marriage Expenses
» Medical Expenses
» Property - Residential
» Non Residential - Should be fully constructed and, should be a freehold property having a clear    and marketable title

Loan Details:

The home equity loan is usually subject to a maximum amount of balance of 60% of the market value and present loan outstanding or, 50% of the market value of the property. This amount will include the cost of the land. Most banks in India determine the loan amount in accordance with the state economic situation for instance in the state of Karnataka and Delhi, these loans are restrictive offering low amounts.

Generally, the loan amount is subject to:
Minimum Market Value of the property being Rs.5,00,000 for Residential property and Rs.7.50 Lacs for Non Residential Property

Repayment Capacity of the customer

Since 1990, Indian banks have started advancing these loans to self employed businesses. These include consumer based sole proprietorships, partnerships, community home businesses and small scale house corporations. The documents have to be thoroughly verified. The bank will generally send a customer service representative to gather information about the business profile and the IT returns of the various business partners. The purpose is to extend the loan to businesses which have a future potential. The representative also collects the bank statements of the various business partners. The bank also scrutinizes the business dealings of the partners.

Home equity loan rates:

The loans are offered at flexible and adjustable rates. The loan program is scheduled to be flexible with low adjustable home equity loan rates for applicants taking the loan for residential property. The loan in such cases is calculated and repaid on the basis of EMI. Loans for non-residential property are subject to high fixed home equity loan rates of interest calculated on the basis of simple interest. Consequently, the loan term for residential equity loans is generally 15 years and for non-residential loans, it is a period of 10 years. Security for the loan is a first mortgage of property. In addition, the lender may request for additional, interim, collateral security. Liquid securities in the nature of shares, fixed deposits may also be accepted as additional securities on a selective basis