Consider these factors when applying for a loan against property

A loan against property is an effective financial instrument that fulfils borrowers’ funding requirements. It offers substantial loan amounts that come with no-end use restrictions, meaning one can finance any expense with this amount. 

Nevertheless, it is important to consider certain factors while applying for LAPs. 

1. Eligibility criteria: Borrowers fulfilling eligibility requirements for a mortgage loan stands a better chance at obtaining a higher loan amount at competitive interest rates. Both salaried and self-employed personnel need to meet their respective eligibility before applying for a loan. 

2. Interest rates: An individual needs to know the current loan against property interest rate prior to loan application as it determines his EMI outgo. 

3. LTV ratio: A Loan-To-value ratio is a maximum cap a lender sets based on a property’s market value. Considering this before the loan application is vital to ensure maximum loan availability. 

4. Location of the property: The value of a property depends on its location. As lenders decide on the disbursing amount to evaluate the property’s market value, it is vital to consider its location before pledging it. 

5. Property insurance: Lending institutions will offer a loan against property to those who possess a property with a valid insurance policy. Insurance comes in handy during unforeseen scenarios, and lenders check them any time throughout the tenor. 

6. Documents concerning the pledged property: Arranging property documents before applying for LAPs is a must to ensure a seamless disbursal process. Therefore, one must keep the property and title documents handy for hassle-free document verification during the loan application. 

Therefore, borrowers should keep tabs on these factors when they are applying for a loan against property.