A loan against property is a secured loan where the applicant’s property is listed as collateral. Be it residential or commercial property or land, you can avail of LAP by pledging it to the lenders. LAPs are long-term loans serving different purposes. People can also compare loan against property details by visiting the site.
Loan amount disbursement patterns, faster approval processes, low-interest rates, etc., are some factors that make LAPs a popular mortgage loan type in India. You can either approach a bank or an NBFC to avail of a loan against your property. Though these loans’ application processing has become easy, some factors still concern people, leaving them at the edge of rejection.
Here are some tips to secure the loans by passing through the LAPs.
Conduct thorough research
One area where most applicants fail to secure their loan is not choosing a suitable lender. Various banks, NBFCs and other lenders offer LAPs. However, each of them has a set of rules for interest rates, loan tenures, EMIs, processing fees, etc. Check with all these aspects for every lender and see if you can afford the loan without risking your property. Pick the appropriate one and proceed further.
Check the Eligibility
Different lenders schedule a unique set of eligibility criteria that needs to be fulfilled to sanction LAPs. As an applicant, you need to be aware of these requirements set by your lender. Do proper research, select a suitable lender, check with its eligibility rules, and ensure that you meet most of them. This way, you’ll have more chances of passing by the LAP effortlessly. It is better to calculate the total amount repayable at the end of LAP’s tenure using different online calculators. That way, you can decide if you can afford it or not and proceed accordingly.
Access your Repayment Abilities
A simple way to evaluate your affordability is by checking your income and cash outflow. If there are any existing liabilities on you, your chances of passing through the LAP are low. Lenders check various factors like credit history, income, number of dependents, etc., to decide their repayment capacity. Your loan will be sanctioned only if all of these are on the right track. Also, remember that the growing number of dependants will curb your chances of getting the loan. Your credit history reveals your payment history, and lenders will check for defaults, penalties, etc. If there are any, your chances reduce. So, try maintaining all these properly at least for 1-2 years before applying for LAP.
Verify the Documents
Documentation is one crucial part of LAP. Lenders will ask for three different types of documents while processing loans against property. KYC documents include your ID and address proofs. You’ll also need to produce your financial statements so that your credit histories are verifiable. Property-related documents are also necessary at the time of applying and whenever asked.
You need to submit the sale deed, title deed and other documents like bills relevant to the property you are using for LAP. If a co-owner of your property isn’t willing to mortgage, it might get hard for you. Moreover, if the property is involved in any family or external disputes, the same happens. Ensure that all the required documents are proper and there are no discrepancies to pass through the LAPs easily.
LAPs can be availed by salaried people, business people or self-employed people. Salaried people will need to furnish additional documents like appointment letters, payslip, etc.
Know the LTV
Loan to Value ratio is different for lenders and usually lies between 60-90% of the property’s market value. This means you need to pay the remaining amount. Higher LTVs are likely to increase the loan amount and your burden too. Lower LTVs can be challenging for some people. So, check how much you’ll receive from each lender using online calculators and pick the suitable one.
Securing a LAP isn’t daunting unless you don’t cooperate with the lenders properly. Go through the discussed points before applying for a loan to get the job done in a swift pattern.