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Compare & Apply for a Loan Against Property Online Research Team | Posted On Monday, September 30,2019, 05:53 PM

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Compare & Apply for a Loan Against Property Online



Are you searching for convenient options to fund your business or avail money for funding your marriage? You will be able to secure a loan easily if you go for a loan against property. A secured loan like Loan against Property (LAP) comes with host of features and benefits to help you finance your high-end expenditures conveniently.

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What is a Loan Against Property?

The loan against property is a second name for a mortgage loan. Banks offer loan against a property when the borrower avails money in return of a mortgage. Mortgage loans can be availed by salaried individuals to finance their personal needs and can be availed by businessmen and self-employed individuals to finance business requirements by mortgaging property.

You can pledge commercial as well as residential property or a plot of land as collateral. The loan will be sanctioned by the bank after estimating the market value of the property.

See Also: Planning To Take A Loan Against Property?

When Should I Consider Taking a Loan against Property?

You should consider availing a property loan under the following circumstances:

  • To fund business growth or meet working capital requirements
  • To finance a child ‘s education
  • To meet family obligation like marriage
  • To fund emergency medical expenditure
  • Loan money to cover personal expenses like vacation

See Also: Compare and Apply for a Loan Against Property Online

Features of a Loan against Property (LAP)

Before you go for this type of loan, you must know its features and benefit as compared to other mortgage loans. To help you understand better, the features of LAP are listed below:

  • Since loan against property is a secured loan, you can only mortgage residential or commercial property to avail the loan. The property acts as the security against the loan.
  • you can avail up to 60-70% of the market value of the property as loan
  • The interest rate may vary from lender to lender as it depends on factors like the type of property presented as collateral, the interest rate offered by the bank, tenure etc.
  • Property loan cannot be availed to purchase land or for home construction
  • The loan is granted after the bank verifies all the documents and evaluates the market value of the property. Generally, the loan sanctioned is up to 70% of the market value of the property.
  • Once the lender has authenticated your credibility as a borrower, the sanctioned amount will be directly transferred to your bank account.
  • These loans are sanctioned for longer tenures and the repayment period may range up to 15 years.
  • You can avail cheaper interest rate on loan against property than personal loans. However, you have to pay a 1% processing fee when the loan will be sanctioned.
  • Banks provide free application processing for these loans if you meet the eligibility criteria set by the banks.
  • If the property meets the eligibility criteria, you can borrow an amount as high as 1 crore.

Documents Required for Loan against Property:

The following section will discuss about the documents you must submit to avail loan against property:

For salaried individuals:

  • Identity proof and proof of residence
  • Salary slip of last 3 months
  • Form 16 issued by your current employer
  • Bank statement of the previous 6 months
  • A cheque for loan processing fee

See Also: How To Apply For Loan Against Property?

For self-employed individuals:

  • Identity proof and proof of residence
  • Bank statement of the previous 6 months
  • IT returns of past 3 years
  • Business proof: educational qualification certificate, partnership deed

Banks and NBFCs Offering Loan against Property:

There are some major banks and NBFCs that offer loan against property. However, to avail such loans you must mortgage a property where the property documents state you are the owner. You can avail up to 75% of the property value as the loan amount. For example, if the value of the property is Rs. 25 lakhs you can avail up to 18.75 lakhs as a mortgage loan.

The interest rate may vary from other types of loan as LAP comes in the secured loan category. You will be able to benefit from the fact that these loans offer you the flexibility to repay the borrowed amount through EMI payments. The repayment tenure goes around 15 years.  A better credit score will allow you to avail a better interest rate on your loan.

The Process to Apply for Loan against Property Online or Offline:

Applying for loan against property is easier and simpler nowadays as most of the banks allow you to submit the loan application online. To apply online you can visit your bank’s website or log in to your net banking account. Provide the relevant personal information along with the property documents. The bank varies your documents and you will receive a call from the bank’s executive for further processing of the loan.

You can also visit the bank directly or can contact the bank’s helpline number for applying for LAP offline.

See Also: What is Meant by a Loan Against Property?

Fees and Other Charges Associated with Mortgage Loan:

Loan against property comes with an array of administrative costs. The verification process of LAP involves charges for the valuation of property, legal scrutiny and processing fees. While availing a mortgage loan you have to bear the following charges:

  • Processing fees: 0.5 to1%
  • Property valuation charges
  •  Legal charges: this charge includes the fee and is paid to the lawyer for conducting the legal search of the property.
  • Mortgage registration charge: includes charges for stamp duty and registration

See Also: Differences Between Home Loan And Loan Against Property

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