In life, there are times when you are in dire need of money. It may be for sending your kid abroad, it may be for your kid’s wedding, or it may be any family emergency. And in these times, one of the best ways for arranging money is by taking a loan against your property. Loan Against Property is a loan that lets you get a loan against your property. This loan can be taken by both salaried people as well as people who run their businesses.
A loan against property doesn’t mean that you can’t stay in the mortgaged house anymore. You can continue to reside in that property and at the same time, pay the EMIs. Loans are offered by banks based on the market value of the property, and the property will be used as collateral until the loan is repaid with interest. For LAPs, the limit is Rs.25 crore, and the interest rate starts at 7.5%. This property can be land, your house, or any commercial property.
Benefits of Loan Against Property
Low rates of interest
Lower interest rates: LAP’s interest rates or mortgage loan interest rates are lower than those of other unsecured loans such as Personal Loans.
If you have a property, you can easily get a loan. Since this is a secured loan, banks are most of the time willing to provide you with the loan.
Loan Against Property has longer tenure, mostly stretching up to 15 years.
Lower monthly installments
EMIs are also reduced due to the long tenure of the Loan Against Property.
We have talked about the features and benefits of a Loan Against Property, now let’s talk about how you can apply for a loan against property without getting any rejections. Below are the steps you should follow if you want to avail the loan against the property without any hassle.
Do your research
Like in any other loan, here also research plays a huge part. Different banks have different processes, charges, and interest rates for loans against property, and hence it is crucial to do your research work before finalizing on any lender. Also, make sure you check their miscellaneous charges like processing fees, service charges, foreclosure charges, etc.
Get the market value of your property
The loan amount will depend on the market price of your property. So, the first thing you should do is get the market value of the property you want to mortgage. Banks generally follow the loan-to-value ratio where the loan amount is a certain percentage of your property’s market value. However, this is not the only criterion that banks will consider. Your eligibility to repay the loan will also play a huge factor. You can use the LTV calculator or loan emi calculator to find out the maximum loan amount and then act accordingly.
Check the eligibility criteria
It is very important to check the eligibility criteria before applying for a loan. Below are some points which every lender generally asks for.
- You must be an Indian-residing citizen
- You must have a regular source of income. And if you have your own business, you have to show your sizable funds or income
- Some banks also have an age bracket for this kind of loan. Make sure you know about it well in advance
- In addition, a credit score of at least 750 is necessary to maximize your chances of getting a loan against property. The documents required for a property loan must also be provided along with these requirements.
Make sure to check lenders’ requirements for documents.
Salaried employees need the following documents:
Income Tax returns
Bank account statements for the previous 3 months
Self-employed people need the following documents
All relevant documents of the mortgaged property
Form 60 or PAN card
Bank account statements for the previous 6 months
Fill out the application process
Once you are done with all R&D, you can fill out the loan application form either online or offline. For the application to process smoothly, make sure you attach all the documents that are required. Once this is submitted, your lender will conduct an evaluation of the property and the documents submitted. And once that is done, your loan will be sanctioned.