How to know if you're eligible for a Loan against your property
Loan against property (LAP) is a popular credit option among borrowers owing to its several attractive features. However, before proceeding to apply for it, it becomes imperative to check the criteria for a loan against property eligibility. Also, there are only a handful of criteria, so you must ensure to fulfil all of them for getting approval.
Eligibility Criteria for Loan against Property
You should fulfil the following criteria to stand eligible for a loan against property:
- You must be a salaried or self-employed individual.
- Your age must be between 25 and 70 years.
- You must be an Indian citizen.
- You should have a steady source of income.
Once you tick all the eligibility requirement boxes, you can proceed with your application for a loan against property.
Steps to Apply for a Loan against Property
You can follow the steps below to apply for a loan against property:
Step 1: Visit the official website of a financial institution.
Step 2: Move to the ‘Loan Against Property’ tab.
Step 3: Click on 'Apply Now’ button.
Step 4: Fill in the necessary details.
Step 5: Upload the required important documents.
Step 6: Cross-check the details to avoid any errors.
Step 7: Click on the ‘Submit’ button to complete your application.
Additionally, you should keep the essential documents ready to avoid a last-minute rush.
Documents Required for Loan against Property
You will need the following documents to apply for a loan against property:
- Identity proof documents: Aadhaar card, PAN card, Voter ID card
- Address proof documents: Utility bills, passport, ration card
- Property papers
- Income proof documents for salaried individuals: ITRs, current salary slips, last three months’ bank account statement
- Income proof documents for self-employed individuals: Bank account statements of the last six months.
However, several lenders can also ask to furnish some additional documents during the LAP application process. There are various features of loans against property that contribute to their popularity among borrowers.
Features of Loan against Property
Some useful features of a loan against property are as follows:
- High LTV Ratio
Generally, for LAP, creditors offer a Loan-to-Value (LTV) ratio of as high as 60% to even 90%. This implies that if the market value of a piece of land is Rs. 1 Crore, you will be eligible for a loan of about Rs. 60 Lakhs to Rs. 90 Lakhs by keeping it as collateral.
- Sumptuous Credit Amount
Lenders generally easily sanction a loan amount of up to Rs. 1 Crore to salaried individuals and up to Rs. 3.5 Crores to self-employed individuals. This is adequate to meet the financial emergency that you are going through.
- Flexible Repayment Tenure
You have the flexibility to select a loan tenure of up to 20 years at your convenience. If you want to repay your credit at the earliest, you can opt for a shorter duration. However, if you are looking forward to repaying the credit in easy instalments, you can go for a longer one.
- Easy Application Process
You can easily apply for LAP online from the comfort of your home by entering some essential details. Also, you will have to arrange for some crucial documents only. This saves you time and makes the application process much more manageable.
- Top-Up Facility Available
You can easily opt for a balanced top–up if you need excess funds. This saves you from applying for another credit. At the same time, you can even extend the repayment duration to pay off your loan with ease.
- Balance Transfer Facility Available
If, after getting approval for the loan amount, you come across a lender offering credit at a lower loan against property interest rate, you can go for a balance transfer. Thus your remaining credit will be transferred to the new lender, whom you will have to repay the same.
Owing to these features, a LAP has proved to be highly beneficial to loan seekers. However, there are certain things that you should consider before applying for a loan against property.
Things to Consider before Applying for LAP
Below are certain things that you should remember before applying for LAP:
- Select the Lender Carefully
You should perform a thorough comparison to select a lender offering a lower interest rate. Furthermore, you should also check their market reputation and consult with some other customers to avoid becoming a victim of fraud.
- Choose the Right Credit Tenure
You should carefully assess your income and monthly budget and accordingly select the tenure. This is so because you will have to pay a higher EMI on selecting a shorter repayment duration and vice versa.
- Calculate Monthly Instalments
Before applying for a loan, it is imperative to calculate the EMIs to plan the credit repayment effectively. For this, you can take help from an online EMI calculator for instant and accurate results.
- Check Your LAP Eligibility
It is highly essential to check the loan amount that you are eligible for using an eligibility calculator. This gives you an estimation of the credit amount that you can get approval for from your creditor.
- Go for an Adequate Loan Amount
You should rightly estimate the amount you need and accordingly select the principal. Otherwise, a higher amount will attract an increased EMI. At the same time, a lower amount may not be sufficient for your needs and may require a balance top-up to meet them.
Checking your loan against property eligibility is essential to avoid loan rejection. This is so because it can affect your CIBIL score, which in turn poses a hurdle for future credit approval.