09 MAY, 2020

Whenever there is an urgent requirement of funds, most of us take a personal loan or borrow from our friends and family members. But, there are many easier ways of getting funds at a faster pace like a mortgage loan or a loan against property.

Applying for Loan against property or property mortgage loan is one of the most common ways through which funds can be generated. Under loan against property, a bank provides you a loan against the property you mortgage. If you are not able to pay the loan, the bank can sell the property to recover the loan amount.

But there are multiple routes through which you can generate funds and accomplish your goals through your property.

  • Overdraft against property

You can use your vacant property to generate funds through overdraft against property services. Through this facility, banks can lend you up to 50 to 65 % of the property market value, depending on your repayment capacity.

The benefits of this facility are that you will have to pay interest only on the amount you have used. The bank will not ask the details of the fund usage, and it can be used for urgent expenses like marriage, medical treatment, educational costs, and many more.

  • Top-up home loan

Availing a Top-up home loan facility can fulfill your urgent requirement of funds quite efficiently. You can use this facility only if your property value covers the existing home loan and the top-up loan.

It is comparatively cheaper than overdraft against property and can be beneficial while doing urgent home repairs. You can extend the tenure of your top-up loan to coincide with your existing home loan.

Various banks provide top-up loan at different interest rates, but the interest rates are usually higher than the home loan interest rates.

  • Loan against property

One plus point about assets is that their value increases with time. Hence you can take a loan against property, which is almost similar to the overdraft against property facility.

Under loan against property, you will get a lump sum amount without any limits, and you can release your asset once you repay the loan within the specified time. A bank provides loan against property after checking the property value, your income, and repayment capacity.

  • Loan against rent receivables

In case if you have rented out your property, still you can get a loan against the rent you receive. Banks provide loans up to 50 % to 80 % of the rent receivable subject to property value.

It is one of the best ways to generate funds to carry out urgent repairs and renovation of the home.

  • Reverse mortgage

It's a type of mortgage loan facility that is quite beneficial for senior citizens. Banks provide 50 % to 70 % of the loan amount against the value of the property under the reverse mortgage.

Under a reverse mortgage, the banks can pay either through monthly installments or a lump sum amount. This facility is available until the death of the last surviving partner, after which the legal heir can repay the loan and claim the property.

The banks can also sell the mortgaged property in order to recover the loan amount. Plus, the borrowers or the legal heir also have the option to sell the property in order to repay the loan.



Terms & Conditions apply. Credit at sole discretion of Kotak Mahindra Bank Ltd. and subject to guidelines issued by RBI from time to time. Bank may engage the services of marketing agents for the purpose of sourcing loan assets.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.