You Must Know Everything About A Loan Against Property

A loan against property provides one with access to funds without any end-use restrictions. It means one can utilise these funds to fulfil an array of financial requirements. Additionally, the long repayment tenor and affordable interest rate are two points that work in favour of this credit instrument.

Nonetheless, before applying for it, one should learn about this financial product in detail to avoid making any wrong decision.

Points to remember while applying for a LAP

If you are planning to take a loan against property, here are some pointers that you should know: 

• LTV ratio 

To secure the best deals and offers on property loan, it is vital the Loan to Value ratio is offered by different lending institutions. The Loan to Value ratio is represented as a percentage that determines the maximum loan availability from a lender against the mortgaged property's current market value. 

Therefore, a higher LTV can increase the risk of a borrower, whereas a lower LTV can get better deals. Moreover, they can use a loan against property interest rate calculator to know the overall interest to be paid along with the EMI. 

• Eligibility criteria 

One must also meet the loan against property eligibility criteria as set by the lending institution. However, some factors considered by the lending institutions are repayment history, age, applicant's name, income proof etc.

• Know your EMI payable  

Knowing the EMIs is another crucial point before applying for a LAP. A point to understand here is that one can make monthly instalments affordable by opting for a longer tenor, but it will increase the total payable amount and vice versa. Thus, individuals can use a loan against property EMI calculator to find a suitable EMI amount as per their suitability.

• Essential documents 

Applicants must check the loan against property documents required before applying for it, although it may vary from lender to lender. Some of the essential documents are: 

1. KYC documents 

2. Address proof 

3. Property documents 

Additionally, applicants must remember that one cannot apply for a loan against property without income proof as it will allow lenders to evaluate a borrower’s repayment capacity.

Hence, a loan against property is one of the viable options for availing funds when experiencing a financial crunch. However, one must not default in payment, as it impacts the overall credit score of an individual.