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Loan against property, or LAP, is a long-term, secured credit available for both salaried and self-employed individuals. This type of advance is provided against a mortgaged property, which acts as a security against the sanctioned loan amount.

Property loans can be availed against various types of properties, including residential, commercial, rented, or self-occupied real estate. Lenders offer as much as 80% of the market value of a mortgaged property as credit, that too without any end-use restrictions, allowing a borrower to utilise the funds to meet a range of financial requirements. 

lap loan

How to apply for a property loan?

Most financial institutions offer easy online applications for prospective borrowers looking to avail a loan against property. However, one must follow certain steps to ensure a hassle-free application process. Let’s take a look.

  • Conduct thorough research –

There are several financial institutions that offer these loans to eligible applicants but at varying terms of lending, which may or may not be equally beneficial to the borrower. It is the main reason why conducting thorough market research is essential before applying for any particular financial product.

It is essential to know the key details, like an applicable loan against property interest rate, repayment terms, processing fees, statement charges, foreclosure charges, EMI bounce charges, etc. before proceeding to apply. It can help select a lender who best meets an applicant’s unique requirements.

Thorough research can also help identify customer-centric features and benefits offered by certain financial institutions. For example, reputed lenders often provide pre-approved offers to their existing customers. These offers streamline the application process, helping them save time and are available on several financial products, including loans against property and home loans. You can check your pre-approved offer by sharing only some essential details online. 

  • Check your loan amount eligibility –
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After shortlisting a particular financial institution that offers the most expansive benefits, one should check the loan amount they are eligible for before applying for a loan against property. Financial institutions determine the loan amount depending on various factors, including one’s means of earning (whether he or she is salaried or self-employed), monthly income, location of the property, previous credit history, credit utilisation ratio, fixed obligations to income ratio, etc. 

It is crucial to assess beforehand the maximum amount one can avail, as an application for a higher amount than one’s eligibility may negate the approval possibility.

  • Check the eligibility criteria –

Another essential thing to know before applying for a loan against property is its eligibility criteria. 

Every individual needs to fulfil a certain loan against property eligibility criteria required by the lender to apply. Although the detailed eligibility requirements vary among different lenders, some of the common factors include – 

  1. Applicant’s age.
  2. Monthly income.
  3. Credit score and credit history.
  4. Any existing debts.
  5. The current market value of a mortgaged property.

Failing to meet any of the required eligibility criteria can result in immediate rejection of one’s loan application, which is why one should check the same before applying for credit.

  • Necessary documents –

Financial institutions will also require certain documents to verify an applicant’s eligibility for a mortgage loan. Failing to present these can be a cause of application rejection. Some of the common documents required to apply for a LAP include – 

  1. Proof of income – Bank account statement, latest salary slip, Income Tax Return, etc.
  2. Proof of identity – Aadhaar Card, PAN Card, Voter ID, Passport, etc.
  3. Proof of ownership – Copy of property ownership papers is also required.
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Certain financial institutions may require additional documents as well to process the loan application.

  • Fill and submit the application form –

After selecting a particular financial institution and gathering the necessary details regarding the credit, one can proceed to fill in the loan against property application form. Most lenders provide both online and offline modes of a loan application; and, one can select a suitable mode according to his/her convenience. Following this, they can get in touch with the financial institution’s representative with relevant documents.

After the process is complete, lenders evaluate an applicant’s eligibility, supporting documents and risk associated with lending by analysing the market value of the mortgaged asset. Once this process is complete, the loan is disbursed to the applicant’s account.

While this was all about the process to avail a loan against property, borrowers must assess their EMI affordability for the selected loan amount and apply accordingly. They can do so with the help on an EMI calculator available online.

Shabbir Ahmad

Shabbir Ahmad is a freelance enthusiastic blogger & SEO expert. He is the founder of Shifted Magazine & Shifted News. He contributes to many authority blogs including porch, hackernoon & techcrunch.

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