Loan against property (LAP) allows the borrowers to avail a loan by pledging their house or property as a security with the financial institution. The borrowers can avail a large amount of money through loan against property. Since a loan against property is a secured loan, a large number of financial institutions are willing to offer this type of loan to the borrowers. Easy documentation, speedy approvals, and flexible repayment options are some of the key benefits of availing a loan against property with a leading financial institution. Therefore, if you are in need of a large amount of money, you can opt for a loan against property.
When applying for a loan against property, it is advisable to evaluate your repayment capacity beforehand. This is because a loan against property is a secured loan, wherein your property acts as a collateral. So, in case you fail to make timely repayment of the loan, the lender reserves the right to seize your property to recover the loan amount. Hence, you should opt for a loan against property only if you are certain about repaying it within the stipulated time.
Benefits of loan against property:
- A large sum of money can be availed. The loan amount is usually 60-70% of the market value of the property being mortgaged.
- Since a loan against property is a secured loan, it has lower interest rates as compared to other loans. Borrowers also get the option to choose between a fixed and floating rate of interest.
- Loan against property often comes for a longer tenure and therefore, has lower monthly installments (EMI)
- It is a multipurpose loan and so, the loan amount can be used to meet both business and personal needs.
- It can also be a great tool for debt consolidation.
Before approving the loan against property application, financial institutions evaluate various aspects such as income, age, qualification and creditworthiness of the borrower. Lenders also make a note of the liabilities and continuity of occupation of the borrower.
- Proof of Residence
- Proof of Identity
- Latest Bank Statement showing income for the past 6 months
- Salary slip if the borrower has a job
- Documents of the pledged property
- If the borrower is self-employed, then the lender may ask for the certified financial statement of last 3 years.
The loan against property is approved only if the borrower satisfies the eligibility criteria set by the lender and provides all the required documents.You can even use the personal loan eligibility calculator for the same. Once the loan is approved, the loan amount is either disbursed in full or in installments as instructed by the borrower.
While applying for a loan against property, it is advisable to compare various loan offers provided by different financial institutions. This will enable you to avail a loan that best suits your needs. It is also advisable to opt for a financial institution that offers low interest rates and other attractive loan against property features. Lastly, do not forget to read the terms and conditions of the loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.