What is Loan Against Property and How to Apply for It?

What is Loan Against Property and How to Apply for It?

A loan against property allows borrowers to utilise the loan amount towards a host of financial obligations. With no end-use restrictions, lower interest rates and flexible repayment tenor, this financial tool is gaining momentum day by day. 

Amid the growing popularity, it is essential for borrowers to be well-versed about the know-how of a loan against property, so that they make an informed borrowing decision. 

Features of loan against property

A loan against property comes with a host of features, including:

  • Substantial loan quantum

The loan amount that a lender disburses is usually higher and can be used to address several personal or business-related financial obligations.

  • Flexible repayments

A property loan comes with a flexible repayment tenor. This tenor can vary as per lenders. However, most financial institutions provide a repayment tenor of 20 years. 

  • No-end use restrictions

The lender disburses the loan amount directly into the bank account of the applicant. As a result, the amount can be used to meet all big-ticket expenses at ease.

  • Lower interest rates

A loan against property is secured against a commercial or residential property. As a result, lenders tend to levy lower interest rates against this financing. This results in overall borrowing affordability.

  • Lower EMIs

Since borrowers can opt for a longer repayment tenor, it significantly decreases the monthly instalments. For a detailed and accurate calculation of EMIs, one can use an online loan against property EMI calculator.

How to apply for a loan against property?

The process to apply for a loan against property online is simple. One is required to visit the website of the lender and follow these steps:

1: Fill up the application form for a loan against property with all the correct details. Make sure to leave no blanks unattended.

2: The lender’s representative will get in touch with the applicant after reviewing the application.

3: After a thorough review, the lender approves the loan application

4: Finally, the borrower is required to submit the necessary documents to finish the process.

After completing the documentation, the lender will process the application and disburse the amount within a specific time.

What are the eligibility criteria to obtain a loan against property?

The eligibility criteria for loan against property are simple. Individuals just need to fulfil the below-mentioned parameters:

For salaried applicants:
  • The applicant must be a residing Indian national
  • Must fall under the age group of 28-58 years
  • Must be working at a reputed private or public limited company or an MNC, with a work experience of at least 3 years.
For self-employed applicants:
  • Must be an Indian citizen residing in India
  • Applicant’s age must be between 25 and 70 years
  • Must provide a steady income source

Remember that these parameters are lender specific and may vary according to the lender you choose.

Meeting the eligibility is the first step towards availing a loan against property. Financial institutions decide to approve or reject a loan application by considering the eligibility of individuals. 

In addition, several leading lenders across the country provide pre-approved offers to individuals meeting/exceeding the eligibility parameters. These offers help in simplifying the loan application procedure by making it hassle-free. They are available across varied financial instruments like home loans and loans against property. Individuals can easily check their pre-approved offers by entering their name and contact details.

Documents required for a loan against property

Before applying for one of the types of loan against property, one must keep these documents handy:

Documents required for salaried individuals:
  • Recent salary slips
  • Last 3 months’ bank account statement
  • PAN/Aadhaar card
  • Proof of address
  • Copy of property documents
  • IT returns
Documents required for self-employed individuals
  • Last 6 months’ bank account statement
  • PAN/Aadhaar card
  • Proof of address
  • Copy of property documents

The list of documents mentioned above may vary from lender to lender. Hence, it is advisable to have a thorough conversation with one’s preferred lender regarding the documents.

Factors affecting loan against property eligibility

Various factors join hands to affect an individual’s eligibility against availing a loan against property. A few of such elements are given below:

  • Income flow

One of the primary factors lenders consider before approving a loan application is the applicant’s income flow. If an individual maintains a steady income flow, the chances of loan approval is higher, and vice versa.

  • Borrower’s age

Lenders are generally sceptical about lending to senior citizens, or applicants who are approaching retirement. However, such applicants can opt for a loan with a shorter tenor or apply for financing with a co-borrower.

  • Lack of property documents

The documents of the property that is to be mortgaged should be kept in order. The lender needs to ensure that the property features a clear title, and any discrepancy in documents could lead to loan application rejection.

These are some valuable details on loan against property that every borrower must be aware of. Asking the lender about additional fees and charges beforehand will facilitate hassle-free borrowing.

Madhavi_sharma

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