Personal Loans: Eligibility For Loans Against Property

Loan Against Property (LAP) is a secured personal loan available for people who own properties. Personal Loans are available as a fixed percentage of the property value. Getting a personal loan secured against property is a smart decision as this opens up possibilities of more funds and lesser hassles in the application process. In general, loans against property come with a lot of benefits because of the trust and reliability on your part from a bank’s perspective, and this translates into smoother services.

Some of the major advantages of availing a loan against property are:

●  Banks tend to provide high loan amounts at competitive rates and for extended tenures.

●     Low EMI values.

●     Speedy approvals and hassle-free processing of applications.

●     Both commercial and residential properties are accepted.

●     A way to consolidate debt.

●     Funds may be utilized for personal as well as business needs.

●     Option to choose between Overdraft facility and EMI based loan.

Eligibility for personal loan against property

The eligibility criteria varies from bank-to-bank but the overview of requirements is the same for most banks. Here is a list of documents and criteria requirements as asked by different banks in India:

●     Minimum age of 21 years

● Maximum age for self-employed people is 60years, and for salaried applicants is 70 years.

●     The valuation of the property

●     Any existing liabilities

●     Presently working at

●     Actual number of dependants and

●     6 months’ bank statement or passbook

●     6 months’ salary slips (for salaried applicants)

●     Last three years’ financial statements that are certified

The amount of personal loan you are eligible  to receive is decided on the basis of your overall income or a percentage value of the property owned by you. This implies that you can get loans up to a specified percentage of the total value of the property against which you are taking the personal loan.

The percentage figure as defined by most banks are:

Personal loan eligibility for residential properties: 65% of the total property value for self-occupied properties. 55% of the property amount for vacant or rented plots.

Personal loan eligibility for commercial properties: 50% of the total property value for self-occupied properties. For vacant and rented properties, this figure stands at 40%.

As mentioned above, most banks follow these figures though you may find deviations of 5-10% in both directions for different banks. It is advisable to check for particular values on respective bank websites or use portals like BankBazaar for getting more holistic results.

LAP vs Home Loans

●   LAP indicates getting a personal loan of around 40-60% against a property owned by the applicant. Home loans are taken to buy new properties.

●     A major benefit here is that the end-use of the money is not monitored in case of LAP, while home loans are actively monitored for any wrong use of funds.

●   LAPs generally attract higher interest rates than home loans due to the lack of accountability of the money loaned by a bank.

●    Home loan is disbursed for a pre-defined value as quoted to a prospective buyer, while LAP can have dynamic values according to present real estate trends.

●     LAPs usually come with a lower repayment tenure than home loans.

You can check the  against property from official bank websites or aggregating portals where you can find more details, compare products, get a quote, and even apply for loans if permitted by the bank!