There are many instances in life where money is necessary. Did you know that in such circumstances, you can utilize your immovable property to obtain a loan to cover all of your financial needs? Yes, your property may be able to assist you in times of need.
This article will explain how to obtain loans secured by any type of property, including newly built homes and other commercial property.
What is a loan against property?
During a financial emergency, you may be able to use a secured loan called a loan against property (LAP). As the name suggests, this loan is provided against a particular asset, such as a house, an apartment, a business, an office, or even a piece of land. The interest rates are much lower than those for other loans, such personal loans, because it is a secured loan.
- The loan amount may be used however you like. You can use it for any need, such as a sudden medical emergency, paying for your child’s college education or wedding, growing your business, remodeling your home, etc.
- The risk incurred by the lender is reduced because the loan is issued in exchange for property as security. As a result, the lender offers reduced loan against property interest rates.
- You can pre-close the loan without incurring any penalties if you want to do so before the term is up.
- The risk to the lender is substantially lower because it is a secured loan. Even in the worst-case scenario, the lender can still recoup the cost of the loan by selling the pledged property at auction. As a result, lenders are more inclined to provide this kind of loan.
- Long terms of up to 15 years are offered for loans against property. This is the best option if you want to pay back the loan over a longer period of time with a low EMI.
How to apply for a loan against property?
After seeing the advantages and features of LAP, let’s look at how to apply for a loan and the stages involved:
Choosing the lender:
Where can I acquire a loan against property? is the first query that all potential borrowers have.
Customers of many NBFCs and all major banks are able to obtain loans secured by property. To choose the best lender, be sure to look at the interest rates, eligibility requirements, and other fees such processing fees and foreclosure charges.
Property Evaluation:
When you approach the lender, a member of the lender’s staff evaluates the property’s net market value to determine whether you qualify for a loan. The value of the property is a key factor in calculating the loan amount that has been approved. For residential properties, most lenders typically approve loans up to 60% of the existing value, and for commercial properties, up to 50% of the value.
Eligibility Criteria:
The next stage for the lender is to determine whether the applicant is eligible after determining the value of the property. The requirements for eligibility differ from lender to lender. In general, lenders analyze an applicant’s credit history and credit score to determine their eligibility.
Lenders have additional qualifying requirements in addition to credit scores, such as the applicant’s age and income levels.
Documents:
Once you have satisfied the qualifying requirements, the lender will ask you for the required paperwork. Each lender has a different set of specific requirements, so check with them first. The general documents that you must submit are as follows:
Salaried Individuals:
- ID Proof
- Address Proof
- Income Proof
- Proof of ownership of property
Self Employed Individuals:
- ID Proof
- Address proof
- Income Proof
- IT return
- Proof of ownership of property
Loa Sanction:
The loan is sanctioned when the lender has verified the submitted paperwork. The disbursed loan amount is immediately credited to the borrower’s bank account.
The loan is repaid in set monthly installments known as EMIs. The loan application process determines the EMI amount. The borrower can then make payments using postdated checks or an electronic clearing service (ECS), in which case the sum is routinely taken out of the borrower’s bank account.
Conclusion:
A loan against property is a great option to use your property to cover all of your urgent financial demands. You can quickly apply for this secured loan by mortgaging a home, business, or piece of land. This loan may accommodate all of your financial demands because of its cheap interest rates, convenient accessibility, and flexible payback terms.
