As a collateral-backed financial instrument, a loan against property allows eligible borrowers to meet high-quantum expenses for marriage, home renovation, medical or academic purposes. However, the Loan against property interest rate and repayment tenor are the key deciding factors. Therefore, one should meet the loan against property eligibility criteria to maximize benefits.
Key deciding factors for a loan against property Interest rate
The rate of interest for a property loan varies with financial institutions. As a secured loan, its interest rates are lower than the other financial instruments. This interest rate depends on several factors, such as type of property, age of the property, CIBIL score, loan tenor, and profile of the applicant.
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It is always advisable to conduct thorough market research and compare interest rates from various lenders. Choose a lender offering the lowest interest rates to reduce the overall borrowing cost. Besides knowing the interest rate, individuals must also check the loan against property eligibility criteria.
Repayment tenor
The tenor for a loan against property is determined by a number of factors, such as the loan amount, applicant’s age, credit score, age of the property, interest rates, etc. However, the tenor offered also varies from one lender to other. In general, borrowers can opt for a maximum LAP tenor of 20 years.
However, a property loan offers a longer repayment tenor than other borrowing instruments. Hence, borrowers must look for a lender offering a repayment tenor per their suitability.
What is the relationship between interest rate and repayment tenor in a LAP
Repayment tenor is directly related to the interest rate charged by a financial institution. A shorter repayment tenor increases the rate of interest. However, the interest rates can be lower for a new property at a prime location as a property’s age and location are important factors in deciding the loan against property interest rate. Individuals can negotiate with financial institutions for a better interest rate and tenor based on the collateral type.
Borrowers can also opt for a part-prepayment facility to decrease their overall borrowing cost. Furthermore, one can also opt for a foreclosure facility at nominal charges.
Type of collateral for loan against property
- Self-owned residential properties
- Commercial property
Mortgage loan eligibility
Eligibility criteria for a loan against property can vary from salaried to self-employed individuals. However, the common loan against property eligibility criteria are-
- The applicant has to be a resident of India.
- Salaried individuals must be within 60 years and self-employed individuals must be within 70 years.
Loan against property documents
To avail a loan against property, individuals must submit the following documents-
- Photo ID proof– Any of these, such as Aadhar Card, Voter Card, PAN Card, Driving License.
- Address proof– Utility bills, Passport, Ration Card, Aadhaar Card, Voter Id(any of the following).
- Property documents
- Last 3 months bank account statement for salaried individuals and last 6 months bank account statement for self-employed.
- Income tax returns and latest salary slip for salaried individuals
One can check the complete list of documents needed to apply for a loan against a property.
After checking LAP eligibility, individuals who want to apply for a collateral loan can follow the below-mentioned procedures.
Steps to apply for a loan against property
1st: Check out the official website of your preferred lender.
2nd: Fill up all the necessary information in the application form.
3rd: Upload the documents.
4th: Submit the form.
With easy-to-meet eligibility criteria and minimal documentation, applicants can avail of high-quantum loan at the earliest. Leading financial institutions provide pre-approved offers for eligible and existing customers to further streamline the application process.
Such offers are available on several financial products like a loan against property, home loan, etc. you can check your pre-approved offer by providing your name and contact information.
Besides knowing the loan against property eligibility criteria, one should be researching side by side on the interest rate and loan tenor to maximize his/her benefits.
