Mandatory collateral is required when taking a loan from a bank. Banks have been keeping property collateral with customers to secure their loans. The customer can mortgage the house or land as collateral. Loans can also be taken from some banks by pledging shares and gold and silver. In terms of house construction, the fair market value of the land and the estimated cost of the house remain as collateral.
If you are going to take a home loan from a bank, it is important to know the approximate valuation of the pledged property. The bank decides how much to lend based on the same value.
Property valuation is an important issue when it comes to real estate loans. Banks hire engineers to evaluate collateral. All three engineers make field visits to assess the property, understand the market value, and evaluate the collateral.
How is the assessment done?
All banks have their own policy. They have their own unlisted panel of valuers. Valuers derive fair market value from government valuation and market value. And, 50 to 70 percent of the same fair market value flows into debt.
If the government valuation of your property is Rs 3 million and the current value is Rs 10 million, then 30 percent of the government valuation will be Rs 900,000 and 70 percent of the current value will be Rs 7 million. Now your fair market value is 9 + 70 = 79 lakh rupees. About 50 to 70 percent of the same amount is available for home loan.
Engineers evaluate real estate independently. Banks are not allowed to interfere in this. Engineers take the bank staff with them to the site and inspect the house and land. They understand the value of movement. The assessment is done by the Land Revenue Office. And, derives fair market value from government valuation and market prices. When valuing real estate, the current price is looked at more.
The government’s valuation of real estate is lower than the current market price. The Land Revenue Office has decided to look into the areas related to government assessment