Best Tips to Plan for a Loan Against Property and Its repayment

When you require a large sum of money to meet professional or personal expenses, or emergencies, a loan against property (LAP) lets you avail of the much-needed capital quickly. This is done by pledging your residential or commercial property as collateral for securing the loan without losing out on its ownership. 

Sometimes, borrowers tend to overlook some important aspects of a loan against property that can streamline the loan approval process. Read on to know more what to keep in mind before applying for funding.

Tips to Plan for a Loan Against Property and Its Repayment

Before you apply for a loan against property, consider the factors that can help you plan for your loan and the repayments easily:

1. Eligibility Assessment

Applicants must fulfil the eligibility criteria if they wish to secure a LAP. A higher eligibility will fetch you better loan deals. Alternately, applicants can also use the online loan against property eligibility calculators to check the loan amount they are eligible for. The calculator takes into consideration the applicant’s personal details and property details, which include income, age, liabilities and obligations, credit score, value of the property, etc. 

2. Accurate EMI Calculation

As part of the loan planning process, one must know the payable EMIs and how much money needs to be kept aside for paying the monthly instalments, in addition to managing their normal expenses. Make use of a property loan EMI calculator to get an accurate estimate of your loan. This online financial tool lets you customise the loan to your preference.

3. Organise Property Records

A loan against property largely depends on the property placed as collateral. Therefore, ensure all the property papers and related documents are in place with clear ownership title. You will need to submit certificates like sales deed, registration certificate, home tax return records and approved building plan attested by the Municipal Corporation among other necessary documents. 

4. Compare Loan Offerings 

Do a comparative analysis of the lenders offering favourable loan amounts relative to the rate of interest. Check for any associated fees and charges levied by them, along with the loan tenor. Select the tenor on the basis of your repayment capacity. Also, bear in mind the factors that can fetch a lower interest rate on your LAP. Use an online loan against property calculator to compare the different loan deals within minutes.

Loan Against Property Approval Process

Depending on the lender, the loan approval process may vary. Listed below is the general process for availing a loan against property:

1. Choose a reputed lender offering the best loan against property deal, which is aligned with your financial position.
2. Go to the lender’s website and fill in the LAP application form. Enter your personal details, income, preferred loan details like loan amount, tenor, etc. The lender will calculate your loan eligibility on the basis of the information provided. Alternatively, you may also visit the lender’s office and apply for a LAP offline.
3. You will have to submit the requisite documents when informed by the lender. Thereafter, the process of verification of your documents and property valuation checks will begin. 
4. Upon completion of the verification process, if the lender is satisfied, a sanction letter will be sent to the applicant.
5. The loan amount will be disbursed soon after.

Eligibility Criteria for a Loan Against Property

A loan against property has easy eligibility requirements. Your eligibility decides the quantum of loan and the terms that may be offered. 

Salaried Individuals

Salaried employees should have the following eligibility criteria:

• Applicants must be Indian residents
• They should be in the age group of 28 to 58 years
• They should have a minimum work experience of at least 3 years in a private organisation, public sector, or a multinational company

Self-Employed Individuals

The eligibility requirements for self-employed persons are listed below:

• The applicant should be a resident of India
• S/he should be between 25 to 70 years of age
• S/he must have a business vintage of at least 5 years

In both cases, another obvious criterion is that the property to be mortgaged should be located in a city when the lender operates.

Documents Required for a Loan Against Property 

A loan against property requires minimal documentation. Applicants must furnish the documents that support the information provided on their loan application form. These include: 

Proof of identity and address

• PAN card
• Aadhar card
• Voter ID
• Valid Passport
• Driving License
• Utility bills

Proof of employment

• Identity card issued by the employer
• Document of business ownership such as partnership certificate and registration certificate (for self-employed applicants)

Proof of income

• Latest salary slips, bank statements of last 3 months, IT returns, etc.
• Primary bank statements of last 6 months, financial documents like profit & loss statements, IT returns, etc. (for self-employed individuals)

Property documents 

• Title documents
• Property tax records 

Note: This list of documents is indicative. Additional documents may be needed. 

Summing Up

A loan against property has no end-use restrictions. Therefore, it can be used to cover a variety of expenses. As a secured loan option, one can easily avail of low rates of interest, longer repayment terms, fast approval and simple eligibility criteria on a LAP.