A borrower’s checklist for loan against property

A Loan Against Property is a secured loan that people use for personal and commercial purposes. If you want to apply for LAP, there are certain things need to consider before hitting that submit button for the loan.

A loan against property is a long-term commitment. The decision should be backed by a thorough understanding of interest rates, eligibility criteria, documents, market rates from different lenders, etc. We will explain the list of considerations for your reference in the passage, go through the blog and make a sound decision of applying for LAP in India.

What is Loan Against Property?

A Loan Against Property is a collateral-based secured loan. Financial institutions offer LAP against fixed assets, non-agricultural land, and properties. You will find attractive interest rates for LAP because of loan amount security for loan distributors and banks.

Borrower’s Checklist for Loan Against Property in India

Interest rates, Loan Amount, and Tenure

Interest rates decide the amount of money, you are going to pay every month as an EMI. Consider EMIs for fifteen to twenty years, and you will realize the importance of interest rates for deciding on LAP.

Updated Interest Rates of market leaders for LAP Loans as on 7th October 2021

  • State Bank of India offers loan amount up to 7.5 crores for the tenure of five to fifteen years at the interest rate ranging from 9.90 to 11.45 per cent annually.

  • HDFC, leading private bank of India provide loan for the tenure of up to fifteen years at the interest rate ranging from 9.90 per cent to 11.90 per cent per annum. They sanction loan amount as per bank’s policy and decide case-to-case basis.

  • Capital First offers loan amount minimum five lakhs’ rupees to maximum ten crores for the tenure of up to twenty years. Interest rate vary as per company’s policies.

  • ICICI Bank provides loan tenure up to fifteen years. They sanction maximum loan amount of five crores with interest rate ranges between 9.80 per cent to 11.90 per cent per annum.

Eligibility and Credit Score

Check your eligibility for the loan against property with loan calculators. Most banks offer the facility to calculate your loan eligibility on their website and application free of cost.

Submit the property’s value, personal details such as full name, income, etc., and the system will calculate your eligibility based on the lender’s internal terms and conditions.

The second part of the point is the credit score. A good credit score is anything above 700. Keep your financial transactions transparent. Do not default or delay loan payments, credit card bills to maintain a good credit score.

On the checklist, you need to see your eligibility and credit score status.

Financial Planning

Make long-term financial planning. A loan against property is a commitment of fifteen to twenty years. It needs a detailed projection about the future source of income, cumulative EMI amount over the years, and expenses for liabilities.

It is advisable to maintain a contingency fund for unplanned expenses such as a medical emergency. You must have enough sources of funds for EMIs and liabilities such as weddings, higher education, etc.

Personal and Property Documents

Banks and Financial institutions are very particular about property documents and their ownership. There should not be any legal dispute, and the borrower should be signing authority for the property pledged for the LAP.

Any misplaced documents and names could cancel your loan application. Arrange, confirm and re-confirm all the property documents.

Personal documents and information should be updated. Write your full name, ID details such as Aadhar number & PAN, and fill all the columns with updated and correct information.

Check your property document and personal documents to move ahead with the loan application.

Market Research

There are several comparison websites available on the internet. Some of the loan distributor websites also provide a comparative analysis of LAP loans from different lenders.

Search on the web and check interest rates, tenure, and other details. Once find the best quotation, move ahead with the loan application.

Documents Required for LAP Loans in India

  • Borrower’s Identity proof: Aadhar card, PAN, Passport, etc.

  • Proof of Address: Driving License, Voter ID, Aadhar card, etc.

  • ITR Certificate

  • Form 16

  • Account Statement as per Lender’s guidelines

  • Salary slips and proof for the source of income

  • Property documents: Registration certificate, Property Tax receipt, building plan approved by your Municipal Corporation, Sales deed, and any other documents required by your lenders

Significant Facts about Loan Against Property in India

  • Borrowers can include a co-applicant who is a co-owner of the property. You can get a higher loan amount with a co-applicant in the application.

  • There is a provision of top-up loans for home renovation, business expansion on the existing LAP.

  • Borrowers need to consider processing fees, taxes, and other charges as decided by the lender during the loan application. These charges will affect your loan amount, EMIs, and foreclosure. In addition, a GST of 18 per cent is applicable on all banking services and products since 1st July 2017.

Concluding Thoughts

A loan against property is a secured loan. Lenders offer attractive rates because of their risk-free nature. But there is no need to hurry. Go through the blog, follow the steps, complete your checklist before deciding the best loan against property for your requirement and source of income.