How to Get Loan against Property & Documents Required

Loan against property (LAP) is the best option for loan as compared to other loans. For financial assistance banks provide various types of loan.

Individuals choose the type of loan according to the requirement like education Loan, vehicle loan & housing loan etc.

There is one such loan known as Loan against property (LAP). It is the most popular type of loan then personal loan.

The most important benefits of Loan against property (LAP) are that the fund can be used for any purpose. It has its own terms & conditions and has its own benefits.

If you think about how to get loan against property and what are the documents required and other rules for apply for a loan.

We explain you in detail about the following:

What is Loan against property?

Loan against property is a type of loan in which you will get a loan by mortgaging your property. Property can be residential or commercial.

How to Get Loan against Property | Documents Required

Loan can be availed by mortgage of residential property as well as commercial property. Commercial property means like if you have a shop then you can simply mortgage it and take loan against property (LAP).

Loan against property is a better option as compared to a personal loan, because in LAP you can take a large amount of loan at lower interest simply by mortgaging a property of higher value.

Moreover this loan gives you the flexibility of end use i.e. you can use the fund for any purpose say on children education, medical expense, buying a house etc.

It is a type of secured loan.

What are the eligibility criteria of Loan against property?

Every bank offers different terms & conditions for loan against property.

But here are some of the common points which defined that you are eligible for taking loan against property or not:

Borrower must be citizen of a country.
You have to submit required documents to the bank or NBFC.
While giving you a loan, financial institution checks cibil score / credit score. If the credit score is better then you will get a loan easily.
If you have any existing loan then your continuity of loan repayment is also referred to before giving Loan.
You must own a property whether residential or commercial for the purpose of mortgage of loan.
You have to submit collateral security in some types of loan.
After verifying your loan repayment capacity banks offer you the loan against property.
Both salaried as well as self-employed can apply for loan against property.
Property against which you are taking a loan must be approved by the bank.
You can add any co-applicant/ co-borrower it will help you get a large amount of loan.

How to get or apply for loan against property (LAP)?

If you are meeting the loan against property eligibility criterion then you can apply for loan.

You can simply approach the bank for taking out a loan and ask for the terms & conditions.

Because every bank offers different terms & conditions for loan in fact there is different document requirement for salaried and self-employed person.

So you need to check the bank which gives your better offer and which is beneficial for you.

Every bank decides the interest rate according to your loan required amount as well as your property value.

If your loan application is accepted then the bank demands certain documents and then the sanction process starts.

Every bank charges some processing charges at the time of loan application. After that some other charges like documentation charges, inspection charges, legal fees, cibil charges etc.

The amount of charges varies from bank to bank. It is a very nominal charge which is like some percentage of sanction amount, so before taking a loan consult with your bank all the terms & conditions.

After completing the documentation, verifying your loan repayment capacity of the individual bank grants you the loan against property.

What are the documents required for Loan against property (LAP)?

Document required may vary from bank to bank but some common documents required are given below:

Documents required for salaried employed:

Application form (duly signed).
Original Property documents.
Income tax returns (ITR) for last 3 years.
Salary slips of the last 3 months.
Proof of identification (PAN Card / Passport / Voter ID etc.).
Residential proof.
Bank statements of the last 6 months.
Proof of Job experience.
Details of existing loans (if any).

Document requirement from self-employed individuals

Application form (duly signed).
Original documents of property.
Income tax returns (ITR) for the
last 3 years.
Financial statements.
Proof of identification (PAN Card / Passport / Voter ID etc.).
Residential proof.
Bank statements for last 6 months.
Details of existing loans if any.
In case of professional – a degree certificates required.
Proof of existence of business.

What are the benefits of loan against property(LAP)?

Residential or commercial property

Loan against property provides against residential property as well as commercial property.

If an individual has shops, office building or even a self-occupied house then can avail loan.

Moreover this loan can also be availed against a plot of land.

Income Tax benefits (In India)

Loan against property also provides various Income Tax benefits.

If you have used a loan amount for construction of home then you can get benefit of deduction on interest paid on loan under section 24 of Income Tax act, 1961 under the head House property and this can be maximum rupees 2 Lakhs.

Under section 37 of Income Tax Act, 1961 you can get tax benefits of Interest paid on Loans against property.

Lower Interest rate

Interest rate of Loan against property is lower than the other loans prevail in the market.

Bank decides the interest rate based on your loan sanction amount, value of property, your creditworthiness, checking cibil score etc.

If your credit score is good you may get a loan at a lower rate of Interest.

Simple process

It is very simple to take a loan against property (LAP). You need to have a property which will be mortgaged for a loan. It does not carry the complex process.

Prepayment charges

If you pay your full outstanding loan before the due date then certain prepayment charges will be charged.

But in case of individual borrowers who have a floatation rate of interest then a relaxation is given by RBI that in such case there would be no prepayment charges.

Flexible

This loan is more flexible than other loans, you can use the fund for any purpose i.e. children’s education, purchase of house, medical purpose etc.

Moreover, the tenure of this loan is very flexible. Maximum tenure is 20 years. You can increase the tenure resulting in lower EMI but have to pay more interest for a long period.

Conclusion

Loan against property (LAP) is very beneficial for those who are an owner of property and they want loan for financial assistance.

They can simply put their property on mortgage and take the loan. Terms and conditions of this loan vary from bank to bank. Now you completely know how to get a loan against property and how it works.

So before taking this loan consult all the requirements of this loan with your bank and take the best benefit out of it.

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