Generally all Banks / HFCs / NBFCs are willing to provide Loan Against Freehold Property. This is because it is considered a safe investment. Not only the registration of freehold property is done but the expectation of an increase in its value is very high.
What is Freehold Property ?
Freehold Property is property that is “free from hold” of any entity other than the owner. Therefore, the owner of such property receives free ownership forever and is free to use the land for any purpose as per local regulations. The sale of a freehold property does not require consent from the State / Local Authority and therefore requires less paperwork which makes the freehold property more expensive than the leasehold property.
There is no restriction on the right of the owner of the inherited freehold property to transfer the property further. In a free hold property, there is no extra charges or taxes to the property’s full title. A freehold property can be transferred very easily by registration of the Sale Deed.
Freehold land title
Freehold land title is a type of property title whereby the owner of the land holds it forever (free from hold). In other words, there is no time limit for freehold land ownership for the zamindar and his beneficiaries.
Can the government acquire freehold land ?
Yes ! Under the Land Acquisition Act, the government is empowered to acquire any type of private land for the purpose of industrialization, infrastructure development or urbanization by giving appropriate compensation.
Why is there no depreciation of freehold land ?
This is because the useful life of freehold land is considered unlimited. Other long-term assets, such as furnishings, equipment, etc. have limited useful lives.
Rights of owners of freehold properties
Freehold property can be inherited. There is no restriction on the right of the owner of the property to move it which can be easily transferred by registration of the Sale Deed. When you buy a freehold property, you own that property – be it a House, Flat, Floor, Factory or Shop. If the property is an apartment, the owner of the house becomes a shareholder in the property. You get the right to stay in that house as long as you want and you are also entitled to make necessary changes in it.
Loan Against Freehold Property
Banks / HFCs / NBFCs are generally more willing to provide a Loan Against Freehold Property than a leasehold property. This is because it is considered a safe investment. Also, the mortgage process of freehold property is very easy. The possibility of an increase in the value of the freehold property is very strong, due to which Banks /HFCs / NBFCs are able to give maximum mortgage loan against freehold property which is around 70% of market value.
Mortgage Loan on Double | Triple | Multiple Freehold Units
Some HFCs / NBFCs provide mortgage loan on multiple units built on same floor. In such flat bankers prefers for minimum area of 50 yards (450 square feet).
Mortgage Loan on Bachcha Flat
This is a small flat builds in stilt parking. In Sale Deed, ground floor is mentioned as stilt parking. If they construct any residential unit on it, technically banker counts it ground floor. Due to this lending institute don’t gives mortgage loan on this. But, Some HFCs /NBFCs provide mortgage loan on such property. Certainly, rate of interest will be slightly higher than usual.
Mortgage Loan on Stone Slab (Kadi Pathar) Roof
Banks / HFCs / NBFCs don’t offer mortgage loan on Stone slab or Kadi Patar roof property. In such case, Bank / HFCs / NBFCs will consider this property for plot purchase. In valuation of property, building value is taken as nil. Bank / HFCs gives loan to make purchase (Plot) and later gives construction loan on same property. It is to make property live-able and safe.
Mortgage Loan for Fitting and Fixture
In Freehold approved location, you can get mortgage loan, up to 140% of Current Sale Deed (Subject to Bank’s / HFCs / NBFCs exposure on loan remains 60% – 70% of property’s market value). Payment up to 80% – 90% of Estimate is done by Bank / HFCs in the name of supplier of fitting and furniture and remaining payment is made in name of applicant on account of “Labor Wages”.
Mortgage Loan Against Freehold Property without Map
In order to give a Mortgage Loan on Freehold Property, All Banks or HFCs must ask the applicant for the approved sanction plan or an approved map of the property. This is an important document.
Before giving the sanction letter to the applicant, the Bank/HFC/NBFC checks with the appraiser on its panel to see if the property has been constructed in accordance with the laws and approved maps. If the property is not constructed as per the approved map, the Bank/HFCs/NBFCs may reject the loan application.
However, there are many properties in Delhi-NCR where an approved map is not available due to various reasons, such as the property is too old, the approved map is missing etc.
If you are applying a Mortgage Loan on your property where an approved plan or approved map is not available, most Banks or HFCs may reject your loan application. However, there are some Banks or HFCs / NBFCs that offer Mortgage Loan Against Freehold Property even without a map with some of their terms and conditions.
Required Documents for Loan Against Freehold Property
| Loan Against Freehold Property : Required Documents for Salaried
Main Applicant
Co-Applicant
Property Documents Minimum 13 Years ownership transfer chain |
Mortgage Loan Against Freehold Property : Required Documents for Self Employee Business Owner
Main Applicant
Co-Applicant
Property Documents Minimum 13 Years ownership transfer chain |
Loan Against Freehold Property : Required Documents for Self Employee Professional
Main Applicant
Co-Applicant
Property Documents Minimum 13 Years ownership transfer chain |
