The bank allows you to avail a loan against property (on your house), as this is a secured loan (your house/property is the collateral) The bank has a due diligence process (the bank appraises your house/property and assesses its value). You are sanctioned a loan up to 60-70% of the value of your property. The bank charges you an interest of around 12-16% for a loan against property. This is much less than the interest rates charged for a personal loan. The tenure of the loan against property is around 10 years. You can mortgage a self-occupied property or a piece of land that you own. The property must be free from mortgage or any kind of litigation. You can avail a loan against property only if the property title is clear. As loan against property (LAP) has long repayment tenure, many citizens who need money avail this loan, as it doesn’t pose much of a burden. Loan against property offers flexible repayment and low interest rates.
Loan against property has several benefits:
- Loan against property can be used to expand your business.
- This loan can be used for an urgent medical emergency.
- Driving License
- Loan against property can be used to renovate/expand or repair house or property.
- Loan against property can be taken to send your child abroad for higher education.
Loan against property eligibility criteria
- The title of the property needs to be clear and marketable. Your bank lends an amount equal to about 50-60% of the value of the pledged property.
- Architects, chartered accountants, cost accountants, company secretaries, doctors, engineers, dentists and top management professionals can easily avail loan against property.
- You can avail loan against property for self-occupied residential properties or even if you have rented it out to a tenant. LAP can be availed against an empty plot of land.
- If you are salaried, you need to have a minimum age of 21-24 years and your maximum age can be around 60 years at maturity of the loan.
- If you are self employed, your maximum age can be 65 years at the maturity of the loan.
- You need to have a minimum work experience of 1-5 years if you are salaried, and you need to be in business for at least 2-5 years if you are self employed.
- Past credit history plays a very important role in getting your loan against property sanctioned.
- The CIBIL score plays a very important part and if you’re past credit history is poor, your loan is liable to get rejected.
- Loan against property can be availed on land/property which has multiple owners. All co-owners must be co-applicants for the loan.
- Loan against property can be availed against a commercial property.
- If property mortgaged is under-construction, the bank will disburse loan amounts is installments. Interest will be charged only on the amount which has been disbursed. This is called the pre-EMI. After full loan has been disbursed, you have to pay regular EMI’s.