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Loan Against Property Loan : Overview

If you have a property and not dealing it, Loan Against Property can give you fruitful option. Your ownership remains continue and you can avail funds at lower rates. Banks offer this loan approximately 40% to 60% of the market value.


LAP is pretty similar to personal loan; the only difference being you put a property owned by you as collateral against the loan. As it's a secured loan; you get a bargain of 2 to 3% on the interest rate you pay as compared to a personal loan.


It can be taken for various reasons, including , expanding your business, getting your son/daughter married,sending your son/daughter for higher studies abroad,funding your dream vacation,funding medical treatments and many more.


The Interest rate ranges from 11 to 14%. This lower interest rate gives a clear edge to it over personal loan where you pay interest in the range of 15 to 20%. Longer Tenure of Repayment reduces your EMI burden as you can get Loan Against Property up to 10 to15 years. When your cash flow is not steady this feature makes the option even more attractive.


Documents Required

Loan Against Property Documents for Salaried Person.

  • 1 passport size color photograph
  • Photo Identity Proof
  • Residence Address Proof
  • Residence Ownership Proof
  • Income Proof
  • Job Continuity Proof
  • Bank Statement: Latest 1 year statement where your salary is getting credited
  • Property Documents
  • Advance Processing Fees Cheque required to process loan documents for sanction.
  • If any existing loan, Need A Payment Track Record.

Loan Against Property Documents for Self Employed Business Person.

  • 1 passport size color photograph
  • Photo Identity Proof
  • Residence Address Proof
  • Residence Ownership Proof
  • Office Address Proof
  • Office Ownership Proof (if any)
  • Business Existence Proof
  • Income Proof: Latest 3 years Income Tax Returs including Computatin of Income, Profit and Loss Account, Balance Sheet, Audit Report, etc.,
  • Bank Statement: Latest 1 year bank statement both current and savings.
  • Property Documents
  • Advance Processing Fees Cheque required to process loan documents for sanction.
  • If any existing loan, Need A Payment Track Record.

Loan Against Property - Process

Not all of us however are aware of the processes or procedures involved with a loan against property, which sometimes create a lot of problems. Without knowing the loan against property process, it would not be possible to understand your loan completely.

In general, loan against property is a 7-step process:

In the first step, you need to apply to a bank with a formal application together with submitting identity, income and address proof details.

  • In the second step, you need to pay a loan processing fee to the bank for commencing the process.
  • In the third step, the bank with verified all the facts and information submitted by you.
  • The fourth step is the most crucial one where the bank will evaluate your repayment capacity against the loan against property amount requested, or to be issued.
  • The fifth stage is one where the bank will draft an offer letter with all the details, including sanctioned amount, interest rates, monthly repayment amount and loan terms etc.
  • The sixth stage will involve property verification where you need to submit to the bank all the documents asked by the banks.
  • The seventh and the last stage will involve home loan disbursal, provided all other formalities are met.

Eligibility

It’s simple and easy to avail loan against property. To get the loan sanctioned, you need to match the eligibility criteria set by banks or financial institutions. Eligibility criteria are more or less same for different banks and you can meet with ease.


As per the criteria, you:


  • You must be an Indian of 21 years or above age
  • Should have a steady income to meet the repayment requirements
  • You have to present a proper proof of the repaying capacity
  • You should have a positive credit history with no issues with your EMIs or repayments with any existing loans



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