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Loan Against Property
Loan against property is a loan which one can avail by keeping your commercial/residential property as a collateral. Another name for Loan against property is a secured loan. The security in this kind of loan is the property owned by the person applying for the loan. The value of your property decides the amount of potential loan you will be sanctioned.
The types of Property against which LAP can be availed:
Self-owned residential property
Self-owned and self-occupied residential property
Self-owned but rented residential property
Self-owned piece of land
Self-owned commercial property
Self-owned but rented commercial property
The eligibility criteria when applying for a loan against property are quite different as compared to that for unsecured loans (personal loans) where an individual’s income shall decide the eligible loan amount. While the eligibility criteria for a loan against property vary depending on the lender, certain factors are considered by all. These include the applicant’s income, his or her savings, and also their repayment track record. This repayment track record includes repayment of credit card amounts, previous loans, etc. The market value of the property is also taken into consideration. Besides this, the applicant’s employment status, his or her age, and financial stability are also taken into consideration before sanctioning the loan amount. Usually, lenders prefer that their customers continue to be employed until the loan is paid off fully. This is why the maximum age-at-maturity of loan against property for a salary-earning individual is 60 years (this is the retirement age in India followed by most organizations). However, for businessmen and self-employed professionals, the age-at-maturity can be higher… say 65 years.
Besides the application form, and other identity proofs one needs to submit ownership documents for the property as well. A property evaluation report is also required. One needs to make sure that all the information mentioned in the documents submitted is accurate and authentic. If you are a salaried person, below are some of the vital documents that you need to submit:
Application form with a photograph attached
Valid photo identity
Proof of current residence 3 latest salary slips
Form 16
Bank statements of the last six months
A cheque for processing fee
Proof of ownership of property
If you are a self-employed professional or businessman the documentation required may vary a little. Following are some of the vital documents required:
Application form with a photograph attached
Valid photo identity
Proof of current residence address
Evidence of business, Certificates of educational qualifications (for professionals)
If you are a self-employed professional you need to submit the last 3 years
IT returns (self and business), Last 3 years Balance Sheets and P&L statements
If you are a businessman you need to submit a business profile, Last 3 years
IT returns (self and business), Last 3 years Balance Sheets and P&L statements
Bank statements of the last six months
A cheque for processing fee
Proof of ownership of property