A loan against property (LAP) is a secured loan that banks, housing finance companies and NBFCs provide against residential or commercial property. These loans are usually offered at a lower interest rate as compared to a personal loan or business loan and are disbursed at a reasonable time. Anyone with a pre-owned property can avail such loans, whether they are salaried or self-employed in a business or professional setup.
Loan Against Property
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Your property acts as collateral for the loan, but you can continue to use it as before. Loan against property allows you to use the value locked up in a property to meet any expenses you may have.
What Is A Loan Against Property
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Features & Benefit Loan Against Property
- Loan against fully constructed, freehold residential and commercial properties for: Business Needs; Marriage, medical expenses and other personal needs; transferring your outstanding loan availed from another Bank / Financial Institution
- Longer tenure, smaller EMIs
- Attractive interest rates
- Easy and hassle free documentation
- Simple repayments through monthly installments
- Integrated branch network for availing and servicing the loan anywhere in India
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9 Factors Affecting Your Loan Against Property Eligibility
- Regular Flow of Income:One of the most primary factors is that the applicant must have a steady and regular source of income which ensures that the home loan EMIs will consistently be paid.
- Age of the Borrower:The borrower’s age plays an important role in the ability of repayment of the debt. If the borrower has already reached the retirement age or will attain the age in a couple of years, then chances are your loan application might get rejected. In such situations, you can always try for loans with a shorter duration, which however results in higher EMIs.
- Bad Credit History:A bad CIBIL Score is the last thing you would want if you’re applying for a Loan Against Property. Naturally, lenders seek the repayment ability of borrowers before lending and your credit history needs to support the fact. Any late payments, cheque bounces, defaults in payments etc affect your credit history and with such impression, chances are your application would get rejected.
- Tenure:With longer tenures, your payments are spread across longer durations, resulting in lower EMIs. In case of low incomes, you can always opt for longer tenures resulting in higher chances of a successful outcome.
- Repeatedly Changing Jobs:If you’re a professional, job stability plays a significant role in your loan against property If you’re in the habit of frequently switching your jobs, your loan application might be rejected by your financial institution.
- Insufficient Property Documents:The documents related to the property that needs to be mortgaged should be complete and in order. This includes title deeds, approvals from relevant authorities, building plans and other documents as required by your financial institution. The lender needs to ensure that the property has a clear title and is approved by the local authorities before lending you the amount.
- Rejection of a Previous Loan Application:Financial Institutions and credit intermediaries keep a record of the loan applications that have previously been rejected. If your loan is rejected, it will appear in your credit profile check, hampering your chances of getting a loan approval. Thus, it is important for you to apply for loans only when in need and avoid applying without any reason.
- Insurance of the Property: Mortgage insurance always lowers the risk of a borrower as well as lender as in case of any unfortunate circumstances, the insurance covers the loan repayment reducing the burden on your family. It’s always advisable to avail a mortgage insurance to safeguard your financial interests while improving your mortgage loan.
It is one of the easiest and best ways to raise funds when you’re in a financial need. However, the ultimate decision is in your hands – if you think you can handle it, by all means, go for it. But if you don’t want to risk pledging your property, then you can go for an unsecured loan like a Personal Loan.
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