Loan Against Properties


Fincrif India

Aug 11

05:58 AM

The term "loan against property" (LAP) refers to a secured loan given by banks, housing finance organisations, and non-bank financial institutions (NBFIs) against real estate, whether it be residential or commercial.

The term "loan against property" (LAP) refers to a secured loan given by banks, housing finance organisations, and non-bank financial institutions (NBFIs) against real estate, whether it be residential or commercial. When compared to personal loans or company loans, these loans are frequently provided at lower interest rates and disbursed promptly. Regardless of whether they are paid or self-employed in a commercial or professional context, these loans are accessible to everyone with a previously owned home. The sanctioned loan amount exceeds those of other accessible options as well.

Lenders only contribute a specific portion of the property's market value, which is among the most crucial LAP concepts to comprehend. Banks often lend between 50 and 60 percent of the value of the property.An additional 20% of the property's worth is provided by private lenders. You keep the collateral with the lender, making LAP a secured loan.

Why Do People Apply For Loan Against Property?

Like personal loans, loans against property can be utilised for a range of things, including but not limited to:

  • School fees for your child to be paid

  • Any medical crisis may be sponsored.

  • Wedding

  • Vacationing in an ideal location

  • adding equipment to a current business or buying new ones

Feature and Benefit of Loan Against Property 

Less expensive: Secured loans frequently feature interest rates that are less expensive than unsecured loans. You also have a better chance of obtaining a loan with a low interest rate if you have a solid credit score and credit history.

Simple documentation and approval process: Process for obtaining approval and supporting documentation is usually straightforward when a loan is secured by real estate. Here, collateral is the piece of property used to guarantee the loan. As a result, the paperwork procedure for lenders might be expedited.

Flexibility in loan repayment: Loan repayment terms can be flexible for the majority of real estate-backed loans. You may be able to get a loan payback period of up to 20 years depending on the lender you choose.

Continuous ownership of the property: Property ownership continues to belong to the borrower in the event of a loan secured by real estate. When you use a piece of property as loan collateral, its ownership remains unchanged. In the event that you are unable to pay back the loan, this also provides you the option of selling the property.

Pre-closure option: If you choose to, you can pre-close the loan secured by the property. You won't be charged any penalties for early loan closure if the loan you acquired has a variable interest rate. You will have to make a little payment if the interest on your loan is fixed.

Maximum property use: If you apply for a loan and put up a piece of property as collateral, you'll be able to get the loan you need to cover the value of the asset. You will also be able to keep your property at the same time. In the event that you decide against selling your home, you can still obtain sufficient funds at a reasonable interest rate to cover your demands.

Eligibility Criteria for Loan Against Property 

Criteria for eligibility for self-employed professionals and non-professionals:

  • You must earn at least INR 1.80 lakhs annually. When requesting a loan, you must be at least 21 years old and cannot be more than 65 when the loan is due to be paid off.

  • At least three years should have passed since your company or organisation began operations.

  • Your organization/business has to have generated steady earnings over the prior two years.

Salary-earning individuals must meet the following eligibility requirements:

  • At least INR Rs. 40,000 must be earned each month.

  • The age range for you to participate is between 18 and 60.

  • Indian citizenship is a must.

  • A graduate degree is required if you work for a partnership or a private limited corporation. If you work for a publicly traded company, a large corporation, the government, or an institution in the public sector, there is no such requirement.

Documents Required for Loan Against Property 

You must present the following paperwork to be qualified for a mortgage loan:

  • Identification documents such as the PAN card, Aadhar card, and voter ID card are all acceptable options.

  • All of the following documents are admissible as proof of address: a passport, an Aadhaar card, a voter ID card, a landline bill, a registered lease agreement, and a driver's licence.

  • You must submit an ITR form and a bank statement as proof of income if you are employed on a salary.

  • If you work for yourself, you must have a CA certify or audit your most recent three years' worth of balance sheets, profit and loss statements, and ITRs.

  • If you financed a business property, the address of the office where you keep your ownership, lease, rent, and utility bills.

  • Chain of Prior Sale Deeds, Registered Sale Deed, Conveyance, Lease Deed, Most Recent House Tax Return, and a Municipal Corporation Approved Building Plan

How to Apply for Loan Against Property 

Applying for an LAP with Home First Finance Company involves the following steps:

  • Clicking on it will take you to the product page.

  • Decide on "Loan Against Property."

  • Your information must be entered into the form. Please confirm that all of the details are accurate.

  • Please be exact while entering your email and phone numbers. Please supply a phone number and email address that you are presently using because that is where all future correspondence will be sent.

  • Read the "Terms and Conditions" completely before clicking "Submit."

  • When the process is ready, our representative will get in touch with you.

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