Loan Against Property: Features & Benefits, Required Documents and Eligibility Criteria

January 03, 2022

Loan against property is a secured loan that you can avail by offering your property as collateral to the lender. It is a multipurpose loan which eases the tension off your head and helps you bridge financial gaps. While you count a lot on your piggy bank, sometimes it is just not enough. There are expenses incurred by uncertainty of time or probably extravagance which leads you to take in your hands a pile of bills. Whether it is your child’s education or some wedding expenditure, maybe you have got debts to consolidate in one go or there is some unforeseen medical stance, loan against property gives you useful financial inflow to have all your random/ not-so-random expenses begone, once and for all.

Features and Benefits of Loan Against Property

1. Versatile Use

If you are being bombarded by truckloads of expenses then this loan is a boon for you. From commercial to residential, you can even apply for a loan against agricultural land. This loan pitches into meeting your financial errands which may involve expenses on wedding, studies abroad, medical emergencies and even debt consolidation.

2. Lower Interest Rates

What makes loan against property look easy on head is the attractively lower rate of interest. The fact that LAP comes from the clan of secured loans, lenders barely have anything to worry about recovering the amount. Even if you fail to repay the loan, the lender can easily bank recovery by legally claiming the collateral. It ends up forwarding ease with interest rates your way. Know that eligibility profile, repayment tenure and loan amount play major determinants in LAP interest rates and can lower or hike them.

3. Large Sanction

This one may be your favorite. Loan against property features a large amount of sanction for borrowers. In LAP, you avail the amount by pledging your property as collateral. Lenders offer an amount ranging up to 90% of market value of the property you pledge. It usually goes up to Rs 15 crore which is sturdy enough to handle your ultra expenses. However, the amount you get is determined by a slew of factors including the type of property (residential or commercial), eligibility profile and of course, your requirement. Lender also checks whether the property is occupied, rented or vacant.

4. Flexible Repayment Tenure

One of the must-know features (and advantage) of loan against property is that it comes packed in the easiest of the repayment tenure options. Banks and NBFCs offer a sound-mood time frame to borrowers for LAP repayment which makes it a favorite preference for many. This loan features tenure options ranging from 5 to 20 years. So whether you are seeking a loan against commercial property or residential one, you have a seamless way to settle the score.

Loan Against Property Eligibility Criteria

Now that you have decided to hop into the loan against property application section, we suggest you get through some research on the eligibility criteria. After all, you don’t want to navigate to the lender only to hear ‘you are not eligible’ in loud echoes.

Lenders have certain eligibility standards that are to be cracked in order to make your loan application a success. The criteria includes parameters such as age, employment, income etc. Not keeping up with the eligibility criteria leads to straightforward rejection which is not ‘not’ disheartening. Or, is it?

It is crucial that you are aware of the eligibility criteria set by the bank or NBFC you are seeking a loan against property from. While this criteria may vary across different lenders, here is the loan against property eligibility criteria that is generally demanded to be matched:

1. Loan against property eligibility criteria for salaried individuals

  • You should be at least 18 years of age to be able to apply for the loan
  • Your age cannot exceed 60 years when tenure terminates
  • You must have all the documents required for loan application
  • You should be employed in a private limited company, public limited company, MNC, Government or public sector company

2. Loan against property eligibility criteria for professionals and self employed individuals

  • You should be at least 21 years of age to be able to apply for the loan
  • Your age cannot exceed 65 years when tenure terminates
  • You must have all the documents required for loan application
  • Your business should have been active for at least 3 years
  • Your business should have declared profits for past two years

Loan Against Property Documents

Loan against property application demands that you perform correct documentation. Only then do you become able to have it sanctioned. You must submit all the documents required by the lender in order to bag your loan application green light.

Here are the documents required for loan against property application:

Documents Salaried Applicants Professionals/ Self Employed Individuals
ID Proof Aadhar Card, Voter’s ID Card, Passport, Driving Licence Aadhar Card, Voter’s ID Card, Passport, Driving Licence
Address Proof PAN Card,  Voter’s ID Card, Passport, Driving Licence, Utility Bills such as Electricity, Telephone, Water Bills PAN Card,  Voter’s ID Card, Passport, Driving Licence, Utility Bills such as Electricity, Telephone, Water Bills
Income Proof Salary Slips, Bank Statements, Form 16 Balance sheet and profit and loss account, IT Returns, Business Proof
Other Documents Passport-size Photographs, Duly Filled Application Form, Any Other Documents Required by the Bank Passport-size Photographs, Duly Filled Application Form, Any Other Documents Required by the Bank

Things to Keep in Mind When Applying for Loan Against Property

Slow down. Before you make the final call on your loan against property hunt, we have got a list of certain checkpoints concerning loan against property which you need to consider before you head on to the application process.

There are a myriad of checkpoints to keep in mind when it comes to the loan against property. It includes aspects like property value, repayment capability and rate of interest. It is crucial that you know everything and decide your next step.

Here are the important points to keep in mind when applying for loan against property:

1. Property Valuation

Property valuation is a deal to look up to when it comes to the loan against property. The amount in this secured loan seeks the current market value of your property. Then comes the question of whether your property is residential or commercial. And the lender also checks if it is occupied, rented or vacant. Banks and NBFCs offer the loan amount playing from 70% to 90% of the current market value of the property. Therefore, it is necessary to check out the LTV and see where the best deal is hiding.

2. Repayment capacity

To be honest, just because you can bank a handsome amount of loan on your property doesn’t mean that you have to. By this, we are hinting at some attention on your repayment capacity. Many banks offer up to Rs 10-15 crore as LAP amount and if your eligibility and CIBIL profile is all smiles with the lender’s requirements then it definitely should not be a problem for you to get this much amount sanctioned. However, never ever should you ask for more than what you can afford.

3. Repayment Tenure

Loan repayment tenure usually ranges up to 5-7 years but when it comes to a loan like LAP, the timeframe becomes coolheaded. Loan against property repayment tenure goes up to 15 years years which is surely sound-good. Many lenders offer up to 20 years of ease with repayment. Therefore, it is important to shop a bit (and more) around and look into the number of tenure years offered by different lenders in order to get the best deal out there.

4. Rate of Interest

Loan against property is one of the important factors to consider for all the obvious reasons. Since this loan is sanctioned in exchange for your property as collateral, the lender charges quite a nominal rate of interest on it. Besides that, there are many other factors affecting the rate of interest on loan against property which you, not at any possibility, should overlook. These factors most importantly include your CIBIL score, loan amount, income and your relationship with the bank. We suggest you do your research and fathom as many deals as possible in order to get the best one.

Loan Against Property EMI Calculator

You may want to tap into the loan against property EMI calculator n to make sure you have a clear headway to loan calculation. LAP EMI calculator is a tool which calculates the amount of EMI payable by you every money or year.

Loan against property calculator requires you to fill in the total amount of loan, rate of interest and months or years of loan repayment tenure. Using this loan calculator, you will know the amount that has to be paid by you and it will enable you to handle your expenses and budget wisely.

How to Apply for Loan Against Property

There are two easy ways to apply for a loan against property- offline and online. Here is how to do that:

1. Apply for loan against property offline

To apply for a loan against property using the offline method, all you have to do is make your way to the nearest branch of the bank or NBFC with all the documents. You will have assistance from the representative with the application process.

2. Apply for loan against property online

Navigate to the official website of the preferred lender in order to apply for LAP online. There, you will be required to fill in details and hit the apply button to proceed.

Frequently Asked Questions (FAQ’s)

Is loan against property a good idea?

People often wonder if loan against property makes a good decision to help them with financial needs. When it comes to the secured loans, LAP is undoubtedly the best one to have your requirements met. From affordable interest rates and easy repayment tenure to a good amount of sanction, this loan is certainly the best deal to try for.

What is eligibility for loan against property?

As the loan against property eligibility criteria, age of salaried applicants must be between 18 to 60 years and professionals and self-employed ones should be between 21 to 65 years of age. Individuals must have all the required documents for application. Lenders also have certain income criteria for individuals which has to be met in order to qualify for LAP.

How much loan can I get in loan against property?

In loan against property, lenders offer the loan amount ranging between 70% to 90% of the market value of the property. The loan amount goes up to Rs. 15 crore and is determined by a group of factors including CIBIL, employment, type of property and not to forget, income profile of applicants.

Can we take loan on property?

If you are looking for a loan on property to take care of your financial emergencies then loan against property is certainly the option made for you. You can offer your commercial or residential property to the lender as collateral and get a loan at amazingly low interest rates and flexible repayment tenure options.

What is the rate of interest for loan against property?

Loan against property interest rates vary from lender to lender. The rates usually range between 8.40% to 11.25% per annum depending on various factors such as your CIBIL, income, type of property, your relationship with the bank etc.

Looking for something more?

You may like these posts