With the advent of an array of financial instruments, individuals often struggle with the decision to choose one. Whether it is the loan amount or the interest rate, their preferences depend on several factors. Nevertheless, a loan against property is such a financial tool that can offer substantial funds in the event of emergencies.
Individuals can avail excessive loan amounts by collateralize their property in case of mortgage loans. Attractive interest rates, along with the immense flexibility of tenor, make this one of the most popular secured credit options. Before learning more about loan against property, one should understand how to define LAP.
What does loan against property mean?
The first step to define LAP involves an explanation of the process to avail it. Individuals who own residential or commercial property now have the option to collateralize their property in exchange for a significant loan amount. As a result, they become eligible to receive loan amounts corresponding to about 60-90% of the property’s market value.
Thus, they find access to considerable loan amounts through a secured loan on house property. This fundamental feature of LAP enables individuals to fund their requirements, which they cannot otherwise finance with conventional loans. As a result, several types of loan against property emerged as a viable option to finance one’s education, business, wedding, and various other needs.
Features of loan against property
Apart from the option to avail increased loan amounts, a loan against property has the following features –
- Competitive interest rates – Lending agencies usually charge an affordable interest rate on LAP. It is primarily because this financial tool is secured with a residential property. Besides, individuals also have the opportunity to avail loan against industrial property. Therefore, financial institutions do not have to worry about individuals defaulting on their repayment liabilities. As a result, they issue these loans at an affordable rate of interest.
- Lower EMIs – As the interest rate on LAP is competitive, individuals typically have to pay lower EMI amounts. It is so because the interest component of the EMI amount reduces substantially. Therefore, individuals can benefit from a convenient repayment schedule with a lower financial burden.
- Customisable tenor – In addition to these benefits, individuals can also customise their repayment tenor after considering their financial situation. Consequently, they have the option to prepay their property loan interest and principal amount as per their convenience. Bear in mind that shorter repayment terms also minimise total interest on such a loan.
Besides, leading financial institutions also provide pre-approved offers on a wide spectrum of financial products. These offers are available on secured financial tools such as loan against property and home loans. As a result, individuals can speed up their loan approval process and benefit from a timesaving experience. You can also check your pre-approved offer simply by providing your name and basic contact details.
Steps to apply for a loan against property
Applicants can either choose an offline application procedure or take advantage of the internet for the same. Those favouring an offline process should head to the nearest branch of their chosen NBFC. For online applicants, a step by step guide to apply for a loan against property is listed below –
- Step 1: Visit the official website of a lending agency, offering a loan against property.
- Step 2: Provide relevant details in appropriate fields to fill up the convenient online application form.
- Step 3: Provide digital photocopies of necessary documents, including identity proof, income proof and more.
- Step 4: Applicants are likely to receive their approval notification within just 48 hours from application.
- Step 5: Lastly, wait for loan amount disbursal.
One should be aware of the complete list of documents necessary to avail such a credit. They include –
- Aadhar Card, PAN Card, or Voter ID Card as identity proof
- Driver’s license, ration card, and electricity bill as proof of address
- Form 16, latest payslip from the employer, IT Returns, bank statement for the preceding 6 months as proof of income
With the simple application process and the presence of relevant documents, individuals can avail up to Rs.3.5 crore as a loan against property from leading lenders. Besides, competitive interest rates and customization tenor define LAP and characterize this viable financial option.