A loan against property (LAP) is a secured loan product that is sanctioned against an existing residential or commercial property. These loans can be used for various big-ticket expenses, such as weddings, education, home renovation, business expansion, and more. In essence, this loan product allows you to unlock the hidden value of your property and use it to fulfill financial needs, personal or business.
Sometimes immediate access to funding is often crucial. Banks have responded to this consumer demand by offering easy online application procedures. Thanks to modern banking, borrowers can easily apply a loan against property online in a smooth and streamlined process.
Factors to Consider When Applying for an LAP
The online process for obtaining a LAP with most lenders is straightforward. However, like any other loan, there are essential factors to consider before taking the first step. These include loan against property eligibility criteria, interest rates, and tenure. Weigh these factors against your financial needs and income to make an informed borrowing decision.
1. Interest Rates
The loan against property interest rate can be affected by several factors. These include the current monetary policy in India (set by the Reserve Bank of India), the loan-to-value (LTV) ratio, and the borrower’s profile. The final interest rate you secure can vary across lenders. Conduct thorough research to identify lenders that offer the most competitive interest rates.
2. Loan Tenure
Choosing an appropriate tenure for the loan depends on your income and expenses. Typically, LAPs come with tenures of up to 20 years to ensure comfortable repayment.
3. Eligibility
Each lender holds a different loan against property eligibility criteria. Typically, banks will have the following criteria in place.
Eligible Borrowers
• Individuals/proprietorship concerns
• Partnership firms
- Limited Liability Partnership
• Private limited companies
• Closely held public limited companies (not listed on any stock exchange)
Salaried Individuals
• Individuals employed permanently in any Multinational Companies (MNC), Public Sector units (PSU), Public Limited Companies listed on Indian stock market, Government/Semi-Government companies, Well-Known Private Limited companies which are CRISIL rated minimum BB+ OR have a turnover over 50 Cr or may be a Non Resident Indians (NRIs)
• Applicant must be at least 21 years old to apply for a loan
At the time of loan maturity, maximum age is restricted to 65 years or retirement age,whichever is lower
Self Employed Professional/Non Professionals
• Doctors (MBBS, MS, MD, Diploma in Ophthalmology [D.G.O], etc.), Bachelor of Dental Surgery (BDS) and D.O.M.S i.e. Diploma in Ophthalmic Medicine and Surgery), Chartered Accountants, Cost Accountants, Architects, Engineers (BE/B. Tech, ME/M Tech, M.Sc. Electronics, AMIE, MS (IIT) and BSc-Engineering), Master in Business Administration (MBA/PGDM/MMS), Company Secretary/CFA working as professional consultants in their respective core field.
• Individuals filling Income Tax returns
• Minimum age at the time of loan application should be 21 years and the maximum age at the time of loan maturity must not exceed 70 years (if income is considered) or 75 years (if income is not considered.
Applying for a Loan Against Property Online
Applying for a loan against property today is easier than ever before, thanks to new-age banking offering consumers a smooth application process. You can apply for an LAP using any of these methods:
· Apply for a loan against property by visiting your lender’s website by entering customer details (name, mobile & city). Subsequently, a bank representative will contact you for further steps.
· Call your banks’ official number available on the website.
· Visit your bank’s nearest branch.
· Contact your dedicated relationship manager to apply for an LAP.
In conclusion, an LAP is an excellent option for those who own a property and wish to borrow a large sum of money. However, it is important to remember that if you fail to repay the loan, the bank can legally possess the property to recover the loan amount. Therefore, it is important to conduct your research and borrow only an amount you can comfortably repay.