Some people invest in real-estate and cover their financial necessities by selling it at higher prices when the need arises. But, what if you don’t wish to sell your property? Is there any way to get instant funds through your property without selling it? The answer is Loan Against Property.
As we know that loan against property is a secured loan that can be availed by pledging the residential or commercial property as collateral with the lender. Whether you require funds to expand your business or finance your child’s education, LAP is an effective solution for all your financial needs. Offered to both salaries as well as self-employed professionals, this multi-purpose loan is usually provided for a tenure of 15 years, and the rate of interest is generally low as compared to personal loans. Moreover, most lenders don’t require you to specify the purpose of availing the loan but only to a particular limit.
A Step-by-step Guide To Getting A Loan On The Property You Own
Securing such a loan is not as easy as it may sound. Thus, here we have provided a few simple steps that can assist you in availing the loan in a hassle-free way.
1. Know your property’s worth
Before you apply for a LAP, it is crucial to know the monetary value of your residential or commercial property, whichever you intend to pledge. Suppose you need a loan amount of Rs. 50 Lakhs, but your property’s current market value is Rs. 40 Lakhs*, then it is impossible to get the entire Rs. 50 Lakhs* as the loan on your concerned property. Further, the loan amount cannot exceed your property’s worth. Still, you can get a loan amount of 70%-80% of your property’s market value. Usually, a high-valued property in a good locality boosts your chances of getting a loan quickly. Also, make sure that it is not a disputed property, and all the owners are mentioned in the loan agreements.
2. Conduct extensive research
There are hundreds of lending institutions in the market that offer different options on LAP. That is why it is crucial to conduct thorough research and find the most suitable lender for your borrowing needs. You may use online financial marketplaces to compare the interest rates, processing fee, Loan to Value (LTV) ratio, documentation, and other formalities, provided by the lenders. Check how the lender evaluates the value of the property to be mortgaged. Further, every lender also offers a LAP EMI calculator, which is a beneficial tool in estimating the loan instalments to be paid every month.
3. Check the eligibility criteria
Once you’ve shortlisted the lender, check the eligibility criteria that you need to fulfil. Failure in meeting these eligibility terms can result in instant rejection of your loan against property application in the initial stage itself. Thus, check the lender’s website and assess your eligibility with a personal loan eligibility calculator. It will aid in increasing your chances of getting your application accepted faster.
Further, you must be aware of the loan against property documents required, such as identity and address proof, proof of ownership of the mortgaged property, bank statements, IT returns, etc.
4. Fill the LAP application
Now, it is the time to fill and submit your LAP application form. You can do this either online by applying on the lender’s website or offline by visiting the nearest branch with all the necessary documents. No matter what way you choose, make sure that you have attached all the relevant documents to speed-up the loan approval process.
The Final Step
After the submission of the loan application, the lender will estimate the risks associated with the whole lending process. Once it is successful, the loan amount is credited into your account within the next few hours.