Secure Loan Against Property From Frauds

In recent times, there has been an increase in fraud activities in housing and financial sectors in India. When it comes to financial crimes, mortgages and loans provide ample opportunity for scammers to defraud, steal, or cut corners. Given the illiquid nature of the property, it is nearly impossible to exit the investment in a hurry. And it is difficult to expose the offenders; therefore, it is critical to understand such frauds and learn how to avoid them.

What is a loan against property?

A loan against property is a type of secured loan, which is granted keeping a property as a mortgage with the lender or the lending institution. This property can either be an owned house, land, or any other commercial asset. Your property remains collateral with the lender until the entire loan is repaid.

This type of secure loan has no end-use restrictions. Nevertheless, the loan amount is much higher, and the loan tenure may also be longer. The primary reason why people take a loan against their property is that the interest rate associated with such loans are considerably lower. However, this makes them prone to frauds as bad actors see this as an opportunity to scam the potential borrowers. 

Loan Against Property Eligibility

The loan against property eligibilitydepends on your loan repayment and credit history, existing financial responsibilities, income, age, and the value of the property as per the current market trends. The documents you have to submit are your address proof and income proof, as well as documents that show the property belongs to you. You can include your spouse as a co-applicant for the loan to improve your eligibility.

Types of fraud you are susceptible to:

• Loan amount disbursed by way of demand drafts or cheque is encased by third-party agents, etc. That is, the disbursed amount is collected by the third parties from the borrower’s lending institution and deposited in a fictitious account. The amounts are then withdrawn from such bogus accounts. To avoid being a victim to this kind of fraud, you are advised to issue the cheque in the name of lenders to the contractors with the account number on it.  

• There are also cases of title documents being forged. Stamped documents are forged by the builder, contractor, or agents, which are difficult to distinguish from the original one. In case of large value loans, the lending institution can approach the borrower or the builder to verify the genuineness of the stamp.

• The borrower may misrepresent asset and income representation on a loan application for manipulating the asset’s appraised value.

Criminal enterprises can take the benefit of the homeowners who are facing issues with their mortgage payments. In exchange for an amalgamation loan and less monthly payment, the borrower pays upfront fees and transfers the property title to the lender. As a result, the scammer keeps all the payment and sells the asset without the consent of the property owner.