How Can a Person Avail a Loan Against Property?

Facing a financial crunch at some point in your life is not unusual. It is quite common and happens with many. Nevertheless, with secured financing options like a loan against property, individuals can conveniently sail through funding hurdles without exhausting their savings. These are high-value advances and available with no end-use restrictions, making them a suitable funding option for diverse monetary needs.

You need to provide a residential or commercial property as a mortgage to a selected financial institution and fulfil a set of eligibility requirements to avail the secured loan. The sum borrowed through the mortgaged property can be used for business, personal, education or other purposes. Loan against property (LAP) is also a flavoured financial alternative because it assures a high loan value at competitive rates as compared to several other loans. Below given are the other essential details you must gain an understanding when availing the mortgage advance.

How much can you acquire through mortgage loans?

The total amount which you are eligible to borrow through the advance depends to a great extent on the mortgaged property. The market value and overall condition of a property are taken into account when assessing such loan applications. Lenders also verify if that property is occupied for residential purposes or commercial use. Usually, about 60-80% of the property’s market value can be availed as mortgage loan.

Known as Loan-to-value (LTV) ratio, it comes into play when the lending institution has to determine how much a borrower can avail against the property. To secure the best deal, borrowers often compare the available LTV ratios and loan against property interest rate offered to them. LTV ratios are usually higher in case of residential properties than commercial ones.

One’s eligibility also determines the amount of loan he/she can borrow through this advance. The requirements, nevertheless, vary from one lender to another. Some common factors that form the basis of eligibility criteria include a borrower’s income, age, creditworthiness, and so on. You can go through the various myths surrounding loan against property to gain a better understanding regarding its eligibility, mechanism, benefits, and terms of borrowing.

Properties which are eligible for a mortgage loan

A borrower can request for a loan against property by mortgaging any of the following types of property:

  • Commercial properties such as shops, malls, complexes, offices, buildings, hotels, etc.
  • Industrial buildings like warehouses, factories, processing units, and so on
  • Residential properties like houses, flats, apartments, etc.
  • Schools or hospitals
  • Lands which are not occupied for agricultural purposes
  • Properties which are under construction

The construction stage of under-construction properties should be at least 90% to qualify for the advance’s mortgage fulfilment. The lending institution verifies the same from the approved builder or architect. So, make sure to check this before you apply.

How to avail a loan against property?

Availing a mortgage or property loan has become extremely convenient because of the online facilities extended by the lender. Borrowers can thus research, apply as well as receive the loan using the online mode. To apply for a loan against property, eligible borrowers need to follow these simple steps –

Step 1: Visit the official website of your desired financial institution.

Step 2: Fill up the online application form with required details.

Step 3: Wait until the representatives get in touch with you within the following 24 hours of receiving the loan application.

Step 4: Enquire and get your loan approved within 48 hours of your application.

Step 5: Submit the necessary documents as asked by the representative. This includes identity proof (Voter ID card, passport, Aadhaar card, or driving license), address proof, latest salary slip or income proof, bank account statements, Income Tax Returns, property documents, and so on.

Once you have completed all the formalities of a loan application, you can expect the loan amount to be disbursed to your account soon. It would take about 3 to 4 days to sanction the loan against property.

Along with other online loan facilities like application and approval, you can also choose to prepay your loan against property online. Further, before applying, you can also operate the LAP loan calculator to estimate your expenses better. Availing these online services will help you make the most of your mortgage loan.

Pre-approved offers from select lenders also increase the convenience of availing funds. These offers ensure hassle-free application and quick approval for applicants and are applicable to several financial products, like loans against property and home loans. To check your pre-approved offer, you just need to provide your name and phone number online.

If you have plans to borrow a loan against property anytime in future, keep yourself informed about the interest rates, eligibility criteria, documentation, repayment terms, and other such relevant details. All these details in place will help you avail the advance with minimum hassle.

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