It often becomes difficult to meet the costs of weddings, overseas education, home renovation, etc., and a credit card is not sufficient to support these expenses. An ideal way to get more funds is to apply for a loan against property.
Apart from its easy approval process, these secured loans are offered at a comparatively lower interest rate than options like personal loans and credit cards. However, one may get confused regarding the requirements to apply for a loan against property.
People often get their loan applications rejected due to improper document submission or unclear property papers or sometimes unavailability of applicable documents. In this article, the reader will get a clear idea regarding the loan against property documents required, eligibility and its application guide.
Loan Against Property Eligibility
Before discussing the documents required for an LAP, it is important to understand the eligibility criteria for a loan against property.
- Ownership: A loan applicant must be the rightful owner of the property which is being offered as collateral. It’s difficult to get a loan against a disputed property.
- Minimum age: The minimum age of an LAP applicant should be 25 years.
- Income stability: The applicant should be self-employed/ professional or salaried and must have a stable and regular source of income.
- CIBIL score: Ideally, an applicant should have a CIBIL score of 700 or higher to get easy loan approvals.
- Nationality: The applicant should be of Indian nationality owning a property in the country.
Loan Against Property Documents Required for the Salaried
Listed below are the documents required by a salaried individual to apply for a loan against property:
- Duly filled application forms with a signature and photographs pasted in it
- Salary slips for the last three months
- Form 16 for at least the last 2 years
- Bank account statement or passbook for the last six months reflecting one’s salary obtained and current repayments
- Age proof includes any of these: PAN card, passport, Aadhaar card, etc.
- Proof of residence includes any of these: passport, driving licence, telephone bill, ration card, voter ID card
- Proof of educational qualification; for example post-graduation certificate, mark sheet, etc.
- Proof of maintenance payments like water tax, municipal tax and any other relevant paid tax receipts
Loan Against Property Documents Required for the Self-Employed
Listed below are the documents required by a self-employed individual or a professional for a loan against property:
- Duly filled application form with signature and photograph
- Income Tax Returns filings for the last three previous years
- Business existence proof which includes a copy of tax registration, company registration licence, etc.
- Bank account statement or passbook for the last six months reflecting the salary obtained and current repayments
- Proof of maintenance payments like water tax, municipal tax and any other relevant paid tax receipts
- Age proof includes any of these: PAN card, passport, Aadhaar card
- Proof of residence includes any of these: passport, driving licence, telephone bill, ration card, voter ID card
- Proof of educational qualification for example post-graduation certificate, mark sheet etc.
- Profit and Loss account, balance sheet and computation of income audited by a CA (Chartered Accountant)
- Tax audit reports for a turnover of over Rs.1 crore
Property Documents
Listed below are the property-specific documents required for a loan against property:
- Gift deed/sales deed as per the applicability
- Latest maintenance bill receipts
- Share certificate
- Occupancy certificate along with a copy of the approved plan
- Proof of no encumbrance
Things to Keep in Mind When Applying for a Loan Against Property:
The following are some of the key aspects that an applicant should keep in mind while applying for a loan against property:
- Apply for a reasonable loan amount
It’s important to seek a loan amount that is reasonable and within one’s capacity to repay. Anyone applying for a loan should assess his/her financial situation and seek a loan amount that he/she can repay easily on time. Late EMI payments or defaults can heavily impact one’s credit score.
One should always calculate the EMI amount beforehand. But in case it’s difficult to do so, one can always use a loan against property calculator to make things simple.
- Dispute free property
Ensure that the collateral being offered for a loan against property is free from any sort of dispute. As any sort of dispute or unclear property papers will result in the rejection of a person’s loan application.
- Appropriate duration
Choosing the appropriate tenure is also a very important aspect. While choosing the tenure one should keep in mind their repayment capacity and the loan against property interest rate. It is recommended to use a LAP EMI calculator to get better clarity on tenure.
- Property value check
Banks and other financial institutions usually take the realisable value of the property into consideration and not the market value. However, in case the property is purchased within the duration of 3 years, the lower of either the realisable or the registered value will be considered by the bank.
How to Apply for a LAP?
Listed below are the steps to apply for a loan against property:
- Firstly, fill up the loan application form, duly signed along with two photographs attached.
- Attach all the above mentioned documents as per the applicability of the lender.
- Submit all these attached documents to the nearest branch of one’s lender.
- Post submission the lender will then start processing the applicant’s loan request.
- Once these are successfully verified, the borrower will get approval.
- Post approval, the lender usually credits the amount to the borrower’s bank account within a couple of days.
Opting for a loan against property is one of the ways to get easy & quick approval for a loan. Hopefully, this article has provided clarity regarding the loan against property documents required and assisted the reader in accomplishing their financial goals. Keeping the above documents in hand will result in a faster loan application.