Loan against Property

If your property is sitting idle, and you have a necessity of additional funds, then you can unlock the value of your property. We know that the necessity of additional funds over and above one’s income and savings is a common phenomenon, especially with the rising requirements. Sometimes you can have a sudden need for money in an inflation period and that too in a limited time. Well, a borrower can opt for LAP i.e. Loan against property-it’s a secured form of a loan, borrowed from financial institutions against your property that is owned or under home loan obligation. Banks or NBFC’s evaluate your property to ascertain its current market value, and a certain percentage of this value is disbursed in the form of a loan, also known as Loan to Value Ratio (LTV). So, when you apply for a Loan against property, a borrower gets to leverage the worth of his or her commercial or residential unit while continuing to enjoy the occupancy of the same.

Purpose of LAP

A borrower can apply for LAP for various purposes. Let’s say for an instance, you can avail the loan for expanding your business, funding your dream vacation, marriage expenses, or any medical treatment requirements, etc. Hence, from business to medical and marriage, a borrower can apply for a loan against their commercial property, residential property or even a plot. A borrower can apply and take a loan against his or her rented or self-occupied residential property that can be a home or a piece of land.

Loan against Property Eligibility Criteria

Well, the criterion for approving the loan varies from one financial institution or from one bank to another. However, we are listing some of the basic loans against property eligibility criteria that almost all banks or lenders look at when you apply for it. The eligibility criteria for banks and other NBFC’s are almost the same for both salaried professionals and self-employed business persons. So, the usual eligibility criteria to avail the LAP are:

  • A borrower should be a citizen of India
  • The minimum age at the time of submitting or applying for a LAP application should be 21 years, and the maximum age is 65 years at the time of loan maturity.
  • An applicant should have a minimum required salary or monthly repayment potential
  • You should have been employed by your current organization or have been involved in a business for a certain number of years.
  • You should have a clean track record of your past credit card payments or any previous loans.
  • You should have a stellar credit history with a proven track record of timely loan EMI repayment, as this factor may help you to negotiate with the lender to secure a lower interest rate. Hence, loan application processing time gets reduced automatically.

Loan against Property Documents Required

Depending on whether you are a salaried professional or self-employed businessman, different banks or lenders ask for a certain set of documents for Loan against property. Some of the commonly asked documents are as follows:-

For Salaried Individuals

  • Identity Proof i.e. KYC such as Aadhar Card, Driving License, Voter ID card.
  • Residential Proof such as utility bill (telephone bill, electricity bill)
  • Salary Slip of past 6 months
  • Form-16 issued by the current employer
  • A Bank statement that reflects salary being credited for the past 6 months
  • Processing Fee Cheque that covers the administrative or processing fee incurred by banks in processing your loan application.

For Self Employed Business-persons

  • Residential and Identity proof documentation
  • Educational certification that proves your academic qualifications
  • IT returns for the past 3 years.
  • Bank statements of the past 6 months
  • Proof of business- all registration or licensing certificate pertaining to your profession.
  • Balance Sheet of the past 3 years, as well as profit and loss statement of your company.