A Loan Against Property (LAP) will help you raise capital based on the value of your property. LAP is available for salaried and self-employed people. You can apply for LAP for both residential and commercial property. You don't have to sell your property to get a loan, and you will get your property back as soon as you repay the loan.
A loan against Property is a secured personal loan that you can obtain by mortgaging your property. Because you are pledging your property as collateral, the rate of interest is low compared to other personal loans.
Eligibility Criteria for Loan Against Property
The eligibility criteria for a loan against property must be fulfilled by the person in order to receive a loan against property. Let us have a look at the eligibility criteria for a loan against property.
- The applicant must be a self-employed, salaried individual or an Indian SME.
- The applicants are between 21 and 60 for salaried individuals and 25 and 65 for self-employed individuals.
- The applicant should have a CIBIL score of at least 700.
- The applicant is required to submit documents such as Form 16, income tax returns from the last two years, KYC documents, bank statements, etc.
- Complete documents authorized by the Government of India for the property to be mortgaged must be provided.
Documents required while applying for a Loan Against Property
- Identity Proof – Documents such as Driving License, Passport, and PAN Card.
- Address Proof – Aadhar Card, Electricity Bill, Passport.
- Property Documents – Copy of allotment-possession letter, No Objection Certificate from the society, and original sale deed.
- Income Proof – Form 16, audited financial sheet, qualification certificate, latest income tax return certificate, shop act license,
- certificate of practice, and tax certificate.
Steps involved in the application process
In the case of every loan, the entire process begins with the application. You must fill out an application form with personal and professional details and several other details regarding loan requirements, property intended to be kept for a mortgage, and much more.
The next step is processing the loan. This step usually begins with a personal discussion followed by a field investigation. While submitting the application form, you must pay the processing fee of up to 1-2 percent of the intended loan.
When you go to the lender for a personal discussion, you must bring all the essential original documents along with the application form. The lender will verify all the individual and employment details based on the documents you submit.
Loan sanctioning is the following process after the lending institution has verified all your financial credentials based on your age, income, qualifications, nature of business, and experience. The lender works out the maximum eligibility of the loan based on your documents. Later, the financial institution sends a sanction letter that possesses all the relevant details of the loan. If you are ok with all the terms and conditions of the loan, then you can sign the acceptance copy.
- Valuation and Legal Check
In the next stage, the financial institution will make valuation and legal checks. The lender's main focus will now shift towards the property that you intend to mortgage. Make sure that you have all the property papers and NOCs ready with you. After checking the legality of documents, the lending institution sends an appraiser to evaluate the market value of your property.
The lending institution will disburse the loan once it is ascertained with all the factors, such as the client's repayment capacity as well as the property's legality. You can use the loan money for various purposes including the expansion of business, child’s education child
