A loan against property is a secured form of credit sanctioned by mortgaging a commercial or residential property as collateral. This asset is kept with the lender until the loan is repaid.
This financial product can be an ideal alternative to different unsecured loans and does not come with an end-use restriction. Moreover, borrowers can avail a higher loan quantum depending on the mortgaged property’s market value, and the repayment tenor is also comparatively longer.
Being a collateral-backed credit, the interest rate on loan against property is comparatively lower than its unsecured counterparts. Therefore, this credit instrument is considered can be a great choice to meet a wide range of personal and professional financial requirements.
While these are the basic things to know about a LAP loan, there are other essential aspects that an applicant must know.
Essential points to about a loan against property
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High-loan quantum
Usually, for LAP, lenders extend 75%-80% of the property’s value as the loan amount. It is also termed as a loan-to-value ratio (LTV). Financiers will estimate the current market value and sanction the loan amount accordingly. Therefore, one should always assess the LTV ratio provided by the lender. A point to remember here is that, the LTV ratio alters from one lender to another, so before applying, individuals can look into it to know more about a loan offer.
To know how much amount they are eligible for, borrowers can also take assistance from a loan against property eligibility calculator.
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Eligibility criteria
Like every financial product, a loan against property also comes with a set of eligibility criteria formulated by reputed housing finance companies. Meeting the following eligibility parameters will enhance the chances of loan approval. Additionally, these parameters alter for salaried and self-employed individuals.
Salaried
- Applicant’s age should be between 28-58 years
- One must be a resident of India
- Must be a salaried employee in a reputed MNC/ private or public organisation
Self-employed
- Applicant’s age should be within the bracket of 25-70 years
- Must be a resident of India
- Must have an established business with a stable income source
By meeting these parameters, borrowers can avail a sizeable loan amount and a low interest on LAP
Documents required for Loan Against Property
Following are the documents required for the application of LAP –
Salaried
- ID proof
- Address proof
- IT return statement
- Present salary slips
- Bank account statement of last 3 months
- Property documents that need to be mortgaged
- PAN card/ Form 60
Self-employed
- Bank account statement of last 6 months
- Address proof
- ID proof
- IT return statement
- Property documents
- PAN card/ Form 60
Borrowers must note that lenders can ask for additional documents during loan processing, so check lender specific requirements for further information.
Read Also: Must Know Things About Home Loan Incentives
Meeting the above-mentioned eligibility parameters and keeping these documents handy can streamline the loan application process of a loan against property. At the same time, one should also know the application process to avoid any hiccups.
Application procedure of Loan Against Property
Input income details to avail the best deals on loan against property interest rate and other associated offers. Following are the simple steps to apply for a loan against property –
- Visit the official website of a financier
- Fill up the loan application form with relevant details
- After the initial approval, submit required documents
- Following preliminary document verification, executives from the financial institution will contact for property verification
- Following successful property verification, borrowers will receive their loan amount
Apart from availing high-loan value and lower interest rates, borrowers can opt for loan against property balance transfer by submitting only a few documents. Moreover, one can also avail of better loan terms with this facility.
To streamline the loan application process further, leading financiers also extend pre-approved offers on a wide range of financial products such as loan against property, home loans etc. Potential borrowers can check their pre-approved offer by submitting their essential credentials.
Thus, the lowest interest on loan against property and other exclusive features make this a reasonable financial product to tackle any financial needs without burning a hole in one’s pocket.
To know more about loan against property for debt consolidation then you must visit Bajaj Housing Finance official website.