Loan Against Property-LAP or mortgage loan is considered as secured loan as collateral is involved. That means you can avail this loan by keeping your property as a mortgage with the bank. Any property, whether commercial or residential, can be used to get a loan against the property. The lender evaluates your property and determine it's market value and based on that value, you get the loan amount. This loan amount could be between 40-65% * of the property's value, though the bank may increase this percentage depending on the creditworthiness of the borrower.

What are the features of Loan Against Property-LAP or Mortgage Loan ?

  • Borrower has to mortgage their residential or commercial property while opting for a loan against property.
  • The interest rate on a loan against property is decided considering various aspects of the applicant's profile like their monthly salary, income details of self employed individuals or businessmen, amount taken as loan etc. As this is a type of secured loan, banks and NBFC's offer lower rate of interest for a loan against property compare to personal/business loan.
  • The tenure for repayment if this loan is kept long very often which could go up to a period of 15 years. Banks and NBFCs offer higher loan amount for longer tenure with exciting interest rates as compared to other loan plans.
  • The borrower is also supposed to pay some extra charges such as processing fees and administrative fees. The borrower also has to pay the the charges for property valuation and its processing fees to the respective Bank/NBFC. Many banks may ask to pay 1% of the loan against property amount sanctioned.
  • The process of obtaining a loan against property is very quick and hassle free. Some banks approve the loan against property as quick as within three days.
  • Loan against property proves to be the best way for debt consolidation. That means you can pay off multiple debts by bringing them under a singular debt.
  • You can use your mortgaged property while repaying the LAP unlike gold where the gold ornaments remain with the banks or NBFCs and you don't get them back until the loan is repaid in full.
  • If the property is owned by partners or directors of a company, then a loan against property can be taken in the name of that firm.
  • Borrower can avail loans from Rs. 5 lakh onwards against a property, if they apply for a LAP.

What are the Eligibility criteria to avail Loan Against Property-LAP or Mortgage Loan ?

The borrower must present all the required ownership documents to obtain a loan. Banks will offer loans to borrowers who meet the loan against the property's eligibility. The eligibility criteria may differ from bank to bank and the profile of the borrower. But there are some common aspects that you must follow to obtain a loan against the property from any bank/NBFC. Some common and generic factors of eligibility for loan against property or mortgage are listed below:

  • Banks give loan against property majorly by dividing their customer's profession and their income history. The common and generic factors are listed below:
  • The borrower has to be an Indian citizen.
  • Professional stability and savings history of the borrower also play a major role in approval of a loan against property.
  • The borrower should have a good credit history at his/her disposal with proven track record of timely loan EMI and credit card bill repayment without any default.
  • Steady and healthy relationship with the bank will also help you to get the mortgage loan against property quickly and you might get exempted from paying the hidden charges and processing fees.
  • The loan against property eligibility is also decided on the basis of the market value of your mortgaged property.
  • The property should currently exist and should be under the applicant's name. The loan against property can be taken as co-applicants if the property is registered under multiple names.
The eligibility criteria for a property loan also change based on the profession of the applicant. The details thereof are given below:

  • Salaried Applicant
  • You must be a permanent employee with either a company or the government.
  • You should also be an employee with government or existing company for a minimum period of 3 months.
  • A salaried applicant must be over 24 years at least in order to avail a loan against property.
  • You should currently be employed with your existing organization.
  • You should maintain a good CIBIL score before applying for this loan.
  • Professional Applicant/ Self-Employed Applicant
  • This category is further divided into two:

    Self-Employed Professional: These can be Architects, Doctors, Chartered accountants and many more.

    Self-Employed Non-Professional: They can be Commission agents, Traders, Contractors and many more.
  • In order to get a Loan against property transfer without a top up for professional applicants, they must be at least 25 years old and this can be extended to a maximum of 65 years.
  • You must be involved in the existing business for few years (This number is defined by the Bank and will not necessarily be the same for every Bank).
  • You must also be a regular in filing income tax returns regularly.
  • The property has to be eligible in order to be kept as collateral with the Bank or NBFC. The loan against property eligibility criteria are given below:
  • The property which will be kept as collateral should not be involved in any legal tangles.
  • The property should have clear titles registered in the name of the applicant.
  • Generally, the market value of the given property should be higher as the loan amount you'll get will totally depend on the current value of property.
  • The property should not be kept as a mortgage with any other financial institution while applying for loan against property.

What are the Documents required to avail Loan Against Property-LAP or Mortgage Loan ?

The list of documents for availing loan against property changes considering whether you're a salaried applicant or a self-employed professional/ businessman. The Loan Against Property process can be made easier if you know exactly what documents you need to submit with your application. The documents are filed according to the eligibility criteria. The list of required documents differs from bank to bank and profession/profile of the applicant. But we have created a generic list of required documents below just for you:

  • Documents Required for Salaried Applicant:
  • You will need to furnish a fully filled and signed application form for a loan against property.
  • The banks will mention the number of Passport-sized photographs.
  • Furnish Identity proof in the form of - Aadhar card, Pan card ,Passport, Driving License, Voter ID card, employee identity card (in case of government employees).
  • Please keep a cheque ready which will cover administrative costs/processing fees that will be incurred by the bank in processing this loan application.
  • Keep these Address Proofs in handy - Rent Agreements, Bank statements, Ration card, Passport, Driving License, Water/Telephone/credit card bill/ Electricity or Property tax.
  • You will also need to arrange for the Age Proofs via - Birth certificate, Secondary school leaving certificate (class 10), Passport, pension payment order or receipt of LIC policy.
  • Apart from all this, please arrange for Salary slips of the past 3 months from loan application date.
  • Please attach the Form-16 that will be issued by your current employer.
  • Get copies of your Bank statements since the past 6 months right from application date towards the loan.
  • Please get a copy of all existing loans and their details.
  • You will have to furnish Property papers with CC and OC.
  • Documents Required for Self-Employed Businesspersons:
  • You will need to submit a neatly signed application form to get a loan against property.
  • The number of Passport-size photographs will be mentioned by the bank as per their form requirements.
  • Kindly arrange for the Identity and signature proof via - Aadhar card, Pan card, Driving License, Voter ID card, Passport etc.
  • Please arrange for the Address Proof in the form of- Rent Agreements, Voter ID card, Bank statements, Ration card, Credit card/ electricity/telephone/water/ bill or Property tax.
  • You can arrange for these documents to show Age Proof - Pension payment order or receipt of LIC policy, Secondary school leaving certificate (class 10), birth certificate, Proof of educational qualification which includes certificates, degrees, diplomas, and other academic credentials.
  • For those with a Business, they can show proof by furnishing the registration of business.
  • Arrange for Copies of Income tax returns or Assessment Orders since the last 3 years.
  • Also arrange for copies of challans which will prove that you have paid the Advance Income Tax.
  • In case you have previous loan history, kindly arrange for copies of all those existing loans and the details.
  • Furnish copies of Bank statements since the past 6 months.
  • Finally, arrange for OC and CC of Property papers.

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