A complete guide on loan against property

A loan against property allows borrowers to leverage their mortgage’s equity and avail credit against it.  However, to gain the benefits, individuals need to fulfill certain parameters laid by lending institutions.

The first step to availing a LAP is streamlining the applications. The steps for the same are discussed below.

 How to make a LAP application?

Potential borrowers can follow mentioned steps to make an application.

• Visit a lending institution’s website 

• Select loan against property from product tab

• Enter the income details to find loan availability

• Submit the form and wait for a representative to connect.

Though the application process is simpler, the loan approval will only occur when an individual meets the eligibility and documentation process.

Here are some pointers to check before making a LAP application.

What are the factors to check for successful LAP borrowing?

1. Eligibility

Every borrower's responsibility is to check loan against property eligibility set by a chosen lending institution. These parameters evaluate an applicant’s reliability. Some of the common requirements include-

• Salaried individuals need to be 28 to 58 years. While a self-employed applicants need to be in age bracket of 25 to 70 years.

• Self-employed individuals should have a steady income flow. While, a salaried applicant must be working for an MNC, private or public firm.

However, you can also avail loan against property without income proof if you have additional income sources. 

2. Documentation

LAP lenders require borrowers to submit certain documents substantiating their repayment capability. Some of papers include-

• Salary slips 

• Identity proof

• Bank statements of at least three months of salaried applicants and six months of self-employed individuals.

• Papers related to income tax return 

• Documents of the mortgaged property, etc.

3. Tenor

Selecting the right tenor is vital to decide the repayment structure. Opting for a long tenor usually reduces the EMIs but increases the interest outgo. While choosing a short tenor helps reduce interest outgo and save more on disposable income. In this regard, using a loan against property calculator would resolve the confusion regarding tenor selection. It is recommended to evaluate the repayment capability before initiating an application.

Learning about the discussed factors in detail would help a loan against property applicant make the right borrowing decision.