Complete Checklist for Loan Against Property for Guaranteed Approval

A loan against property is perhaps the simplest loan that any property holder in India can avail. The primary requirement is that the applicant must own a residential or commercial property, and the property must be free from legal disputes.

You can also apply for a loan against a property if you own freehold land. Read on to get an overview of a loan against property, including documents required, eligibility, loan amount, term, interest rates, and the things you should do for instant loan approval.

Why is a Loan Against Property Special?

A loan against property, or LAP loan, is a no-frills loan that anyone can apply irrespective of their income and societal status. You can use the loan amount to fund high-value purchases, such as house, car, motorcycle, etc.

You can also use it to pay hospital bills in case of an emergency, consolidate business debt, or renovate your house. The minimal documents required to avail a loan against property make it even more attractive.

Eligibility Criteria

The most basic requirement of a LAP loan is property ownership. You can apply for a loan against self-occupied or rented-out property. To get guaranteed approval, you need to submit the documents required for availing a loan against property.

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Generally, lenders evaluate your credit score, monthly income, age, status and location of the property, and the relationship with the lender before approving the loan. You can often get the best rates if your credit score is above 800.

Also, your monthly disposable income must be stable to take care of the increase in the monthly outflow. Additionally, your age should be between 21 and 60, and the property you want to pledge must be free from legal litigations. 

Documents Required

The documents required for loan against property include age proof, address proof, educational degree certificate, income proof (salary slips or Profit & Loss statement), Income Tax Returns, bank account statement, property papers, and processing fee cheque.

Reputed lenders like PNB Housing Finance offer the facility to upload the documents online and benefit from faster loan approval.  

Loan Amount

The loan amount or loan to value ratio, of a LAP loan is the amount you can apply for proportionate to your monthly disposable income. Generally, lenders allow you to spend up to 50% of your net monthly income as loan EMI.

Also, you cannot get more than 60% of the property value as a loan. Hence, you should calculate your LAP loan eligibility considering these parameters and submit the documents required for a quick loan against property approval.

Loan Term

A LAP loan generally comes with a repayment term of twenty years. However, the higher the loan tenure, the more will be the interest rates. If you want to save interest costs and close the loan earlier, it is better to opt for a short-term LAP loan. 

Interest Rate

LAP loan interest rates start from 9.50%, and the best rates are usually reserved for borrowers with a credit score of 800 and above. If you want to lock-in the loan interest rate, you should opt for the fixed rate.

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But, if you are certain that the interest rates will drop more, opting for the floating rate will suit you more.

Conclusion

Besides the documents required for the loan against property, you have to fulfill the eligibility criteria and choose an appropriate loan term for guaranteed loan approval.