A Loan Against Property (LAP) is a secured loan that can be availed of against the asset pledged as collateral. The asset could be your land, house or commercial premises. The loan is sanctioned based on the current value of the property. The property remains as collateral until the loan is repaid. Because of its flexibility in terms of usage (you could use LAP amount to fund any financial requirement), over the years, LAP has become a preferred option for debt consolidation.
Before learning more about loan against property and its eligibility criteria, let’s look at some of its features.
The following are some of the key aspects to remember when looking for a loan against property:
Refer to the table below for loan against property interest rates:
|Banks/NBFCs||Interest Rate (p.a.)|
|Navi Home Loan||8.39% onward|
|HDFC Ltd.||8.4% onward|
|State Bank of India||8.50% onward|
|Axis Bank||8.60% onward|
|Kotak Mahindra||8.40% onward|
|Tata Capital||8.60% onward|
|IDFC FIRST||8.45% onward|
Please note tat the above table is for educational purposes only. The rates could change at the sole discretion of the bank.
Loan against property or mortgage loan is a popular loan method among the borrowers. The process to apply for a loan against property is as follows:
There are many banking and non-banking financial institutions providing loans against property. You have to do your research carefully and choose from them as suitable for your criteria.
Then, you should find out the market value of your property to find out how much loan you avail of against the property.
Once you have zeroed down the lender, check their eligibility criteria and also the required documents you have to submit for the loan application to process.
If you meet the eligibility criteria, go to the website and fill out the loan application form. Submit the form along with the required documents. If you want to apply online, you have to visit the nearest office of the lender and submit the form along with the documents.
You will need to furnish the following mortgage loan documents if you are a salaried employee:
If you own a business, you need to submit the following documents:
Keep in mind that these are the basic documents necessary to avail of LAP or Loan Against Property. Also note, some financial institutions may ask for additional paperwork.
A loan against property has more than the principal amount involved when it comes to sanctioning and repayment. The following are the fees and charges associated with loan against property. These might vary depending on the loan amount and bank or financial institution.
Interests are paid with the principal amount on a monthly basis. In the initial stage of repayment, the EMIs mostly include the interest which is gradually decreased and the EMIs during the final stages of tenure mostly consist of the principal loan amount. The borrowers can choose from a fixed or floating rate of interest.
Lenders impose a non-refundable one-time fee while processing the loan.
Individual borrowers with floating interest rates will not have to pay any charges for part payment. However, non-individual borrowers and individuals with fixed interest rates will have to pay charges for making part payment.
Same as the part payment charges, individuals availing of floating interest rates will not have to make any foreclosure charges. But borrowers with fixed interest rate or non-individual borrowers with floating rates will have to pay a nominal fee as foreclosure charges.
If a borrower fails to make his EMI on time or even within the grace period, then they have to pay the EMI bounce charge as penalty.
The borrower might have to pay statement charges for the loan statements or principal and interest statements separately on the interest.
Loan against property eligibility criteria tends to differ from one lender to another. However, the following are some of the basic requirements you must fulfil:
Lenders also specify an age group, and only those falling under this group can avail such loans. Moreover, you should maintain a credit score of over 750 to maximize your chances of securing a loan against property. Keep in mind that along with meeting these requirements, you have to furnish the documents required for a property loan.
The loan against property eligibility calculator uses the given eligibility criteria for loan against property analysis:
Here are some crucial factors that play a vital role in determining your eligibility for a loan against property:
Now that you know about loan against property eligibility criteria, here’s how to ensure that you qualify for such a credit:
Additionally, look for a lender with relaxed eligibility criteria.
Manual calculations for loans are complicated and can have errors. A loan against property eligibility calculator has the following benefits:
It gives you a detailed information on the EMIs, the interest and principal division of EMIs and the remaining amount after the payment of EMI/s.
EMI calculation prior to availing of loan helps you compare and choose from the lenders.
These calculations are fast and precise. As these are system-generated, it has almost zero possibility of errors.
A loan against property is a long-term credit, much like a home loan. You can opt for a tenure of up to 25 years for repaying this debt. Besides bearing the monthly EMIs, you can choose to prepay a lump-sum amount when you have excess funds available. This reduces the interest burden for the loan.
Assessing the loan against property eligibility criteria and necessary documents is crucial before signing up. Also, evaluate your property value before taking LAP. Doing so can simplify the process of application while maximising your chances of acquiring the advance.
In case you’re looking for LAP, try Navi Home Loan. With Navi, you could get LAP up to 90% of the property value at attractive rates starting from 8.39% p.a. The entire application process is 100% paperless with instant in-principle approval. Download the Navi app today!
Ans: The repayment tenure for loans against property varies from one financial institution to another. However, it mostly ranges between 15 to 20 years.
Ans: Yes, you can have a co-applicant for a loan against property. However, only the following individuals are allowed to be the co-applicant:
The applicant’s parents
Parents and their unmarried daughter
The applicant’s spouse
The applicant’s brother
Ans: Any residential or commercial property can be used as security for a loan against property. However, some financial institutions let you use open lands as collateral for loans against property as well.
Ans: Yes, loans against property can be used as an overdraft. The financial institution approving the overdraft facility credits the amount and sets a limit for withdrawal. The interest is calculated on the withdrawal amount only on a daily basis. Deposit is at the will of the borrower.
Ans: Your property must have valid insurance when you want to avail a loan against it. Moreover, the insurance policy must stay in place for the entire tenure of this loan. You must submit documents related to this policy while availing such a loan.
Ans: A loan against property is available for both sole ownership and co-owned houses. In the case of a co-owned property, both owners would be named as applicants for the loan. Moreover, lenders will check the eligibility of both of these owners.
Ans: A mortgage is available on all of the following – self-occupied flat, apartment and house, commercial properties, and plot of land. Commercial properties can include shops, offices, malls, and other such complexes. Ask your lender about other property types on which it accepts loans against property applications.
Ans: Loan against property applications involve a processing fee. The exact percentage of this fee can differ from one lending institution to another. Generally, this fee is 1% of your loan amount. For instance, if the loan principal is Rs. 10 lakh, the processing fee would be Rs. 10,000.
Ans: Loan against property foreclosure refers to repaying the outstanding dues through a lump-sum payment. This effectively closes your loan account before the tenure runs out, thereby saving you a sizable interest payment. To foreclose such loans, you must write an application to your lending institution expressing your intention.
Are you looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.60% p.a.
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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