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Major Factors You Should Consider While Taking Loan Against Property

A loan against property is a slightly more complex loan to undertake when compared with personal loans. The following are the major factors you should consider when availing of it.

Loans against properties are a great way to finance your needs with pre-existing assets. A property loan is a secured loan wherein immovable holdings like property or land is pledged as the mortgage. Here, the borrower must be the owner of the property. Many people turn to selling some assets or taking other loans to fund significant expenses. A loan against property is a great way to op

timize the benefits of investments you already own and get a more affordable loan. 

While the overall process of availing a loan against property is simple, that can only be possible if you keep in mind certain factors. These considerations will be discussed below, and it is vital to consider them when applying for a LAP.

Eligibility Criteria for LAP:

All loans have specific parameters that all applicants must adhere to. Some standard loan against property eligibility conditions are as follows:

  • Your sales and title deeds must be clear of any discrepancies that could impact your loan in the future. 
  • All your property documentation is in place for availing the loan against properties. 
  • Must have a stable and regular source of income.
  • An Indian citizen and needs to meet the age criteria provided by your specific lender.
  • You do not have the right to apply for a loan against property for a property that you do not own, or you live in on rent. 
  • Not allowed to put up an empty or unused piece of land for the mortgage. 
  • Commercial properties can also be pledged for a property loan
  • Applicant must be working for: 
  • An MNC 
  • Privately owned company
  • Public limited companies
  • Your ‘to be mortgaged properties’ should be in major cities of India. Or as per those mentioned by your lender. 
  • You must have a stellar CIBIL score of 750 and above
  • There must be no defaults in repayment in the applicant’s credit history

The above-mentioned points are a highly comprehensive set of guidelines that you must stick by when applying for a loan against properties. By following them thoroughly, you will be guaranteed a financially viable loan offer. 

Documentation 

If you urgently need funding, LAP’s can be slightly more time-consuming to navigate through. It takes loans against properties 2-3 weeks for processing and disbursal. Therefore, ensure all your documents are in place from the get-go to avoid constant back and forth communication. The following are the required documents: 

  • For salaried individuals:
    • Latest salary slips 
    • Bank account statements of the last 3 months 
    • PAN Card 
    • Aadhar Card 
    • Address proof 
    • Copy of the property’s documents 
    • Income tax returns 
  • For self-employed individuals:
    • Bank account statements of the last 6 months 
    • PAN Card 
    • Aadhar Card 
    • Address proof 
    • Copy of the property’s documents 

Once you have all these documents handy, the sanction period should not be extended beyond the lender’s average period of response.

Additional Read: Define Cross product and Its properties

Overhead Fees and Charges

A majority of property loans have a processing fee linked to them. The fee is usually 1% to 2% of the amount you borrow. Therefore, when deciding to undertake this loan, make sure you have this amount ready. It is also essential to keep this in mind when determining the loan amount you will be undertaking.

Loan Amount and Tenure

The loan amount and tenures broadly impact the affordability of your loan. It is crucial to ensure that you agree to the lowest possible tenure based on your financial standing. A decreased term makes sure the amount you pay in interest is as low as possible. It automatically means your EMI would be higher. Therefore, only agree to such clauses if you are sure that a high EMI will not cause financial strains on you and your family. 

Conclusion:
Covering all bases when taking a loan enables you to pay off your debt much sooner. Get started now and find a lender that offers competitive interest rates and complete transparency to secure your financial health!

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