Loan against property or simply “Mortgage Loan” is a loan which a salaried or a businessman can avail by keeping some asset as a mortgage with the bank. It is one of the most common types of loan after personal and home loan and can be easily availed against the property you own.
Features
- Commercial or residential property can be used as collateral for taking a loan.
- CIBIL score is checked first before approving the loan.
- The tenure of Loan against property is between 10 years to 15 years.
- The Loan is only sanctioned after property valuation done by the bankers.
- You will get upto 40% to 75% of the property value as the loan amount.
- One has to submit identity proof, address proof, property documents, and income proof documents to the lending institution.
- LAP can be taken Individually or Jointly.
Benefits
- The loans are secured loans and that’s why they are easier to get.
- Low-interest rates.
- Pre & Part payment is possible with low to no charges.
- Advance payment before the loan tenure will be possible with low to no prepayment charges.
- EMI amount will be low if the loan tenure is long for LAP.
Eligibility for Loan Against Property (LAP)
Like every loan, Loan Against Property also has eligibility criteria that a user has to match to get qualified for LAP. Here are the eligibility criteria that can help you in getting the mortgage loan
- The loan can be taken against self-owned or rented or vacant commercial, residential, and industrial properties
- The applicant’s age should be between 18 to 70 years
- The Employee should have a salary of Rs 25,000 or above per month
- The Employee should have work experience of 3 years and above
- Self Employed should have a stable business for over 5 years and above
- Self Employed should have a stable business for over 5 years and above
- The Applicant should have a decent CIBIL score to avail Loan Against property
- The Property title should be legality and technicality clearance
- The applicant should have a Telephone/ postpaid mobile
Document required for a Loan Against Property
Different banks require different documents on the basis of your occupation.
Following are some of the common documents which are required to be submitted
Salaried Professional
- Identity Proof
- Address Proof
- Last 3 months’ Salary Slips
- Form-16
- Appointment Letter and Experience Letter
- 12 months Bank Statement
- Processing Fee Cheque
Employed Businessman
- Business KYC : Pan Card , MOA , AOA , Certificate of Incorporation, Address Proof
- Business Approvals (e.g.: License for Hospital Business, Liquor Business,)
- Business Registrations (e.g.: GST Registration Certificate, VAT Registration, MSME Registration, RERA Registration)
- Last 3 years Audited Balance sheet and Profit and Loss statement
- Last 3 years of IT returns along with computation, Form 3CB and Form 3CD & Statutory Audit Report
- Last 12 months’ Current A/c/ Cash Credit Statements of the business entity and Savings Account Statements of the individual
- Existing Loan Details (Sanction Letter & Statement of Loan)
- Property Details ( Ownership Agreement, Chain Documents, Approved Plans, Construction Approval Details with Plan)
- Business KYC : Pan Card, Partnership Deed, Certificate of Registration, Address Proof
- Business Approvals (e.g.: License for Hospital Business, Liquor Business,)
- Business Registrations (e.g.: GST Registration Certificate, VAT Registration, MSME Registration, RERA Registration)
- Last 3 years Audited Balance sheet and Profit and Loss statement
- Last 3 years of IT returns along with computation & form 3CB and 3CD
- Last 12 month’s Current A/c/ Cash Credit Statements of the business entity and Savings Account Statements of the individual
- Existing Loan Details (Sanction Letter & Statement of Loan)
- Property Details ( Ownership Agreement, Chain Documents, Approved Plans, Construction Approval Details with Plan)
- Business KYC : Shop Act, NOC, Address Proof
- Business Approvals (e.g.: License for Hospital Business, Liquor Business,)
- Business Registrations (e.g.: GST Registration Certificate, VAT Registration, MSME Registration, RERA Registration)
- Last 3 years Audited Balance sheet and Profit and Loss statement
- Last 3 years of IT returns along with computation & Form 3CB and Form 3CD
- Last 12 months’ Current A/c/ Cash Credit Statements of the business entity and Savings Account Statements of the individual
- Existing Loan Details (Sanction Letter & Statement of Loan)
- Property Details ( Ownership Agreement, Chain Documents, Approved Plans, Construction Approval Details with Plan )
Following are some of the other documents that are required for getting the loan against property
- Passport size photographs of all the applicants
- All loan sanction letters
- Last 12 months’ Bank Statements showing repayment of any ongoing loans
- Title Deeds including the previous chain of the property documents
- Sanction Plan approved by Municipal Corporation Proof of No Encumbrances on the Property
Types of Loan Against Property
Loan Against Property – Residential
It is the loan that is taken against the residential property for purposes like business expansion, obtaining assets, medical emergencies, and marriage, etc.
Regular loan against the residential property is provided by all the banks and NBFCs and the interest rates on the loan can be charged between 9.50% to 15.15%.
Loan to Value ratio required for sanctioning of the loan ranges from 40% to 75%.
The processing fee for approving the loan is charged between 0.20% to 2.00%.
The Fixed Obligations to Income Ratio(FOIR) should be between 0.55 to 0.65.
Loan Against Property – Commercial
This is a loan that is taken against commercial property and includes shops and offices. There are only selected banks that offer loan against commercial property.
The interest rate charged can be between 9.50% to 15.15%.
Loan to Value ratio required for approving loan ranges from 40% to 75%.
Around 0.20% to 2.00% of processing fee is charged and FOIR to get the loan should 0.65.
Loan Against Property – Industrial
It is the loan that is taken against the industrial property. There are a very limited number of NBFCs and banks that offer loan against industrial property. Around 10.85% to 13.35% of interest is charged on the loan. Loan to Value ratio required for sanctioning of the loan ranges from 40% to 65% and processing fee on the loan ranges from 0.20% to 1.00%. And FOIR of 0.65 is a must to avail the loan.
Loan Against Warehouse
This is the loan that is taken against the warehouse. It is very beneficial to those who are involved in the commodities operations like the farmers, processors, traders and aggregations.
Loan Against Property Overdraft
Such loans are taken when borrowers expect that their income will rise throughout the year. The benefit of this facility is that you will be able to pay your debt before the loan tenure. Overdraft facility will be suitable for businessmen as it will help them to reduce their interest liability.
Balance Transfer & Top Up
A balance transfer is a transfer of your existing loan from your current bank to a different bank where the interest rates will be low. Balance transfer will lead in savings of your EMI cost.
A Top Up is an additional loan that the new bank will offer on your existing property if you transfer loan amount from your old bank to them. The new loan can be used for a house renovation, education of the child or for holidays.
Lease Rental Discounting
An owner can get a loan on the property which he had rented. The rent paid by the tenant directly gets deposited into the bank(Lender) from which the loan was taken. By this way, the lender is able to recover the loan amount from the borrower(Owner).
Commercial Property Purchase Loan
Such type of loan is helpful in purchasing shops, clinics, office space and many other business establishments. This loan facility is very beneficial for business expansion.
Loan Against Plot
If you are having a plot and you require some money then you can take a loan on that plot. There are many banks who provide loan against plot with discounted interest rates.
If you are looking for advice or consultancy for your Loan Against Property in Pune, Nagpur or Bangalore, contact LoansXpert for a free advice and consultancy to get the best guidance for your LAP
