Characteristics Of Loan Against Property
- Cheaper than Personal Loans: It works out to be much cheaper than a personal loan, which is usually issued at interest rates in the region of 16% – 21%.
- Longer Loan Tenure: The tenure for a Loan against Property is usually longer than that for a personal loan. Generally, LAP is given for a maximum tenure of 10 years.
- Lower EMI: Since the rate of interest is lower, many times, LAP Equated Monthly Installments (EMI) turn out to be cheaper than those under personal loans.
- Simple documentation and Fast Approvals: LAP being a secured Loan has comparatively faster approvals and minimal documentation
Loan Against Property can be taken for following purposes:
- Expanding your business
- Get your child married
- Send your child for higher studies
- Fund your dream vacation
- Fund Medical Treatments
Documents Required For Personal Loans
Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc. Following documents are required by financial institutions to process the loan application:
- Income
- Age Proof
- Address Proof
- Income Proof of the applicant & co-applicant
- Last 6 months bank A/C statement
- Passport size photograph of the applicant & co-applicant
- Property Documents
| In case of Salaried | In case of Self-employed |
| Employment certificate from the employer, | Copy of audited financial statements for the last 2 years |
| Copies of pay slips for previous few months & TDS certificate | Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company |
| Latest Form 16 issued by employer Bank statements | Profit and loss account for the last few years |
| Income tax assessment order |
How is (Loan Against Property) Eligibility Calculated ?
The borrower’s eligibility of obtaining a Loan against property depend upon his/her re-payment capacity & the banks establish this re-payment capacity by considering numerous factors such as income, age, spouse’s income, number of dependents qualifications , assets, liabilities, stability and continuity of occupation & savings history. Eligibility Factors in Loan against property Your Loan against property eligibility is determined by your re-payment capacity and also the value of the Property
- Income
- Qualifications
- Age
- Spouse’s income
- No. of dependents
- Stability & continuity of occupation
- Assets / Liabilities.
- Savings history.
- Sale Deed of Property with Map
The most important / necessary concern of banks in determining your loan eligibility is that whether or not you are contentedly able to pay off the amount you borrow.
The Second factor is the value of the Property
Banks are okay to fund 50-60% of property value but with the condition that you have income capacity that you can pay its EMI each month.
Related Questions
Who can avail a Mortgage Loan?
Both for Salaried & Self-Employed individuals / people can avail Mortgage Loan, irrespective of the income.
Which factors determine / verify the eligibility of a mortgage loan?
The factors taken into account while determining their legibility of loan against property are listed below:
- Income
- Age (Min. 21 Yrs.)
- Property Valuation
- Existing Liabilities (if any)
- Current Work Experience
- Financial Documents
- Number of Dependants
How much loan can I get?
You can get a (LAP) up-to 80% of the registered value of your property depending on the Bank’s policy and therefore the property type and valuation.
How would the value / worth of my property be determined?
The value of the (property) would be determined through a valuation conducted by the Loan Provider.
What is the difference b/w a Home Loan & Loan against Property?
There is a huge difference b/w a Home Loan and a Loan against property. Home Loan is taken for the purpose of buying a residential property whereas a Loan against Property can be taken for any purpose.
What are the stages involved in availing the loan?
- Application
- Processing
- Documentation
- Verification / Valuation
- Sanctioning of the Loan
- Disbursement
Is there any processing fee charged by the Bank?
Yes, a nominal fees and charges are to be paid to the Bank depending upon their term and conditions.
What are the documents needed / required for applying for a loan against property?
For Salaried:
- Application form with 2 photograph
- Identity & Address Proof
- Latest Salary Slips
- Form 16
- Bank Statements (Last 6 months)
- Processing fee cheque
For Self-Employed:
- Application form with photograph
- Identity & Address Proof
- Proof of business existence & Education Qualifications.
- Last 3 yrs. (ITR)
- Last 3 yrs. P&L & Balance Sheet
- Bank Statements (Last 6 months)
- Processing fee cheque
How much time does the Bank take to disburse the loan?
The processing of the loans usually takes 7 to 10 working days once all the documents are submitted. It also depends up-on your profile and documentation.
Does the property have to be insured?
Yes the property has to be insured against fire, earthquakes and other appropriate hazards during the tenor of the loan.
How can I re-pay my loan?
The re-payment of loan is completed through Equated 30 days Installments. It can be paid through (PDC) Post Dated Cheques or (ECS) Electronic Clearance System
Can I pre-pay my loan?
The loan against property can be prepaid along with the prepayment charges. Usually the bank charges 2% of the principal prepaid.
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