Process of Applying for a Loan Against Property

A loan against property, often termed as LAP, is a collateral-backed financial product offered by lending institutions. Borrowers can avail a loan on property by mortgaging the same with lenders. A LAP comes with relatively lower interest rates and a higher principal. Borrowers get to make use of their property’s market value to avail credit, utilizing the property as an asset to draw funds for personal or professional expenses.

LAP loans are usually extended on two types of interest schemes. One is a fixed interest rate, while the other is a floating interest rate. It is upon these rates that the affordability or cost of borrowing depends.

Process of loan against property in India

In order to avail any financial product, an individual has to fulfil specific eligibility parameters. Different lending companies have varied parameters for LAP loan applicants. The eligibility of an applicant is usually judged based on his/her:

• Age

• Income

• Nationality

• Credit score

• Current financial obligations

The loan against property interest rate can also depend on these factors. If you meet the eligibility criteria, you also get a chance to bargain for the best LAP interest rates with your lender. It’s smart to understand the factors that affect the LAP interest rate before applying.

Once you meet the specific eligibility criteria, you can go ahead and apply for a loan on property. The application process includes the following steps:

1. Fill up the application form by an applicant

2. Representatives from the lending company will reach out to you; discuss your application further to understand the documentation and other details

3. The lender sanctions your loan 

4. Submit the necessary documents for verification

5. The lender will disburse the loan amount if there are no discrepancies

One of the other crucial things you must know about a loan against property is the list of documents mandatory for loan approval.

Documents required to avail a loan on property

A LAP applicant has to submit specified documents and copies to the lender after applying; these include:

• PAN card or Aadhaar card

• Address proof

• Latest salary slips (if the applicant is a salaried individual)

• Income tax returns

• Bank account statements of the preceding 3 months

• Documents related to the property to be mortgaged

If you are looking to ask what is mortgage loan’s maximum sanction amount, the answer depends on the market value of the pledged property. You can avail 75% to 90% of the property’s market value as a loan. Proper insurance documents of the property are also required for the approval of Loan Against Property. The types of property accepted as collateral in a mortgage loan are:

• Residential property (self-occupied or rented)

• Residential plot with no construction

• Industrial property

• Commercial property (self-occupied or rented)

These properties can be mortgaged to avail a high loan amount. The greatest advantage of such funds is that there are zero restrictions on their usage. This means that a borrower is free to devote these funds towards his/her personal, medical, business, family, or even education expenses.

Applicants often get worried over mortgage loan interest rates, owing to repayment liabilities. To address such concerns, reputed lending institutions guide their customers regarding EMI structure. If you visit a lender’s portal, you can also access a loan against property calculator, which is designed to compute the EMIs payable to settle your loan against property.

One interesting feature in loan disbursals these days is a pre-approved offer. Reputed NBFCs extend offers that allow individuals to access funds faster and more easily. These offers are applicable on several financial products, including loan against property, home loan, etc. Check your pre-approved offer by providing your name and contact number.

The demand for loan on property has experienced a significant upsurge lately due to reduced interest rates in the mortgage lending market. Moreover, with reputed NBFCs offering multi-benefit loan packages, LAP has emerged as one of the best credit choices to meet financial shortcomings.