A loan against property the type of secured financing which requires the lender to pledge their commercial or residential property as collateral to obtain an loan. The amount of the loan is usually determined using the value that is marketable for the property that is secured.
A loan against the property (LAP) can be described as a form of secured loan that permits homeowners to use the worth of their home to get money. This kind of loan is very popular with homeowners as well as property owners who require large amounts of money to fulfill various needs including expanding their business, paying for education emergency medical expenses, and additional financial requirements that are significant.
Eligibility for Loan against Property
Age of the borrower should be between 18-65 years.
Loan against property can be availed by Permanent Employees Central/State Govt/PSUs/Teachers/MNC employees. With minimum 2 years of ITR or Form no 16 with minimum income of Rs. 5 Lakh. However, Loan Against Property can be availed by Working professional /Business Class with minimum 3 years of standing in the business and having annual income more than 5 lakhs per annum.
*Self Employed Professionals includes CAs, Doctors, Architects, and CMAs etc. with their own practicing.
Type of Property required for Loan Against Property
Any Residential/commercial property in his/her name which is unencumbered and under self-occupancy is required to avail Loan Against Property. The Property should be in his/her name with minimum more than 1 Year.
Unencumbered rented House or Commercial property is also eligible to avail Loan Against Property.
Leasehold property may be accepted as security, where Government/ Quasi Government Development Authorities (Industrial Development Authorities) allot properties on lease. However, SEZ property is not eligible under this scheme. Age of the building offered as security shall not exceeds 30 years.
Minimum Income Required to avail Loan Against Property
To avail Loan Against Property Loan for salaried and Self-employed Working professional, last Two-year Average Gross Income should be minimum 5 Lakhs. For Businessman, last Three-year Average Gross Income should be 5 Lakhs. Cash accruals/Depreciation also may be added to income, in case of borrowers other than salaried class.
Close relative/s (son, father, mother, daughter, sister, and brother, along with the spouse) may join as co applicant/s for supplementing repayment capacity and annual income criteria. However, maximum of two co- applicants can join to supplement repayment capacity and annual income criteria. At the same time applicant/ co- applicant should be in the Tax payer bracket
Eligible Loan Amount
It is observed that, many Banks lends 50%-75% value of the property. In the form of Term Loan or Drop-Down Overdraft Facility.
Purpose
Loan Against Property can be used for meeting various personal needs like Children’s Education, Marriage of Children, Medical treatment, Travel/ Tour expenses, buying vehicle or hi-tech gadgets, other domestic needs etc.
Credit Score
This is foremost important factor in deciding your rate of interest in Loan Against Property and check your credibility. Generally, CIBIL score of greater than 750 will be accepted widely by all banks and NBFC. The higher your CIBIL score lower will be applicable rate of interest this is inversely proportional to your CIBIL score.
Our team strongly suggest to maintain the Good CIBIL score for better financial health and widely acceptability from all banks and financial institutions.
Credit History
CIBIL report is very important to know the credit history of the customer, while checking the CIBIL report. No overdue, SMA/SUB in the past. No written off/ settlement A/cs
Documents Required to Avail Loan Against Property.
Photo Identity Proof
Any One from the following;
- Passport
- Pan Card
- Voters ID Card
- Driving License
- Aadhar Card
Residence Address Proof
Any One from the following;
- Passport
- Ration Card
- Utility Bill: Electricity Bill/ Land Line Bill
- Voters ID Card
- Driving License
- Aadhar Card
Income Proof
For Salaried Class Government/ Non-Government.
- Original / Certified copy of the latest salary slips for the past 3 months
- Copies of IT returns of last 2 years duly acknowledged by IT Dept./IT assessment orders or Form 16
- Undertaking from the employer for remittance of monthly instalment, where ever feasible
- Bank Account (Salaried Account) Statement for the last 6 months
For Non-Salaried Class/ Businessman/ Professional
- Latest 3 years Income Tax Returns including Computation of Income, Profit and Loss Account, Balance Sheet, Audit Report etc
- Shop Establishment Act
- Tax Registration Copy
- Company Registration Licence
- Bank Statement for past one year
- The ITR can be verified from income tax online by entering the acknowledgment number and status of the same can be obtained.
- documents thoroughly. Get any discrepancy / doubt clarified immediately.
Rate of Interest, LTV Ratio, Loan Tenure.
| Banks | ROI | Loan Amount w.r.t. to Property Value | Loan Tenure |
| Union Bank of India | 10.60% to 13.15% | 75% of Property Value | 30 Years |
| Bank of Maharashtra | 10.95% to 11.45% | 60% of Property Value | 10 Years |
| Bank of India | 11.25% onwards | 40% of Property Value | 15 Years |
| PNB | 11.15% to 12.25% | 70% of Property Value | 20 Years |
| Central Bank of India | 12.25% | 65% of Property Value | 10 Years |
| Canara Bank | 10.50% to 12.50% | 50% of Property Value | 15 Years |
| Indian Bank | 10.10% to 11.75% | 50% of Property Value | 15 Years |
| SBI | 10.10% to 11.15% | 60% of Property Value | 15 Years |
| UCO Bank | 11.85% to 12.85% | 50% of Property Value | 12 Years |
| Bank of Baroda | 10.85% to 15.85% | 75% of Property Value | 15 Years |
| Punjab & Sindh | 10.05% to 11.30% | 50% of Property Value | 5 Years |
| HDFC Bank | 9.50% to 11.00% | 65% of Property Value | 15 Years |
| AXIS Bank | 10.50% to 10.90% | 70% of Property Value | 20 Years |
| ICICI Bank | 10.85% to 12.50% | 75% of Property Value | 20 Years |
| Kotak Mahindra Bank | 9.50% to 12% | 70% of Property Value | 15 Years |
| IndusInd bank | 8.75% to 14.10% | 75% of Property Value | 20 Years |
Conclusion
The bottom line is that the final result is that a Loan Against Property can be an effective financial instrument, giving individuals access to significant funds. It requires careful approach, an accurate assessment of the risks and responsible managing finances to reap the benefits of this tool efficiently.”
“In final the conclusion, it is clear that a Loan Against Property presents a solid financial option for those who require substantial money without having to compromise their possessions.
