Life often brings surprises that we do not plan for. Sometimes, these situations require unexpected expenditures we are not prepared for. A Loan Against Property is a possible solution to deal with such emergencies. It lets you use your property’s value to get the required funds without hassle. Whether you need money for a personal expense like purchasing a car or dealing with a medical emergency or for professional expenses like business growth, a loan against land document can help you.
Do you need funds for a planned or unplanned expense and want to borrow a secured loan? Here’s a complete guide to the Loan Against Property process.
What is a Secured Loan Against Property?
A Loan Against Property, or LAP, is a secured loan type where a lending institution grants you funds with your property or land as collateral. That means the lender will hold the property’s ownership until you repay the entire loan amount with interest. If you default on the loan, the lender has the legal right to sell the property to recover the outstanding balance. The loan amount depends on your property’s value, the interest rates are lower than unsecured loans, and the approval time is quick.
Benefits of Borrowing a Loan Against Property
Before apply for mortgage loan, you must understand the benefits of borrowing one. These include the following:
● Faster Approval:
Lending institutions usually quickly approve secured loans due to lower risks.
● Lower Interest Rates:
The interest rates for secured loans are usually lower than unsecured loans, making them cost-effective.
● Longer Loan Terms:
You may borrow a Loan Against Property for a longer tenure, making them better manageable.
● Free Usage:
You are free to use the loan amount for pretty much any purpose, compared to other loan types like home and bike loans that come with restricted usage.
● Hassle-Free Process:
The application and approval process is quick and hassle-free due to faster internal processing and minimal formalities involved.
Steps to Prepare for a Loan Against Property Application
Speaking of the hassle-free process, let’s look at this guide to prepare for the application:
Plan Ahead:
The first step to taking out a loan is to plan for it. Identify your loan requirements and decide upon an adequate loan amount before applying. Furthermore, consider a sensible repayment plan according to your situation and finances.
Research:
Browse through the various lenders while checking their loan offerings. Gather details about them and opt for one that fits your loan requirements. Look for one that offers convenience and flexibility in their loan plans with ample loan amounts, reasonable interest rates, and favourable repayment terms.
Check Eligibility:
After shortlisting a few lenders, check their eligibility criteria to be fulfilled. A LAP eligibility calculator makes this step much easier and faster before application. Usually, these are the common eligibility conditions you must fulfil to apply for a LAP:
- Indian citizenship
- Age between 25 and 75
- Profitable business operations with at least a few years of vintage
Prepare Documents:
Once you are sure you can qualify for the loan, check their documentation requirements and gather the necessary documents before applying. It will save you from running around when you need to present them.
The Application Procedure
Now that you are well-equipped with the loan prerequisites and prepared for application, let’s move on to the actual Loan Against Property process:
- Visit the lender’s website and complete an online application form with the necessary data. These include your personal, professional, and financial details. It also requires information about the property you want to pledge as collateral. Double-check the details before submitting the application form, as a single mistake, discrepancy, or falsification may lead to loan rejection.
- After successfully submitting the loan application form, the lender will verify your information and ensure your loan eligibility. Moreover, they will check your finances and repayment capacity to ensure you can repay the loan on time. Although they have your property as collateral in case of a default, they expect timely repayment to avoid foreclosure-related formalities.
- You must provide a few necessary documents to apply for a loan against land document. These include identity proof, address proof, signature proof, proof of business existence, income proof, and a complete set of documents of the collateral property.
- The loan company will verify all the submitted documents and conduct a background check on the property, your employment status, credit history, etc. With these checks, they want to confirm your eligibility and repayment capacity for the Loan Against Property. If required, a customer representative may call you during the lender’s working hours to confirm other details or request more documents.
- After verifying your documents, the lender will finalise the loan terms and send you a loan offer with your approved loan amount, interest rate, and repayment structure. Check the loan plan carefully before accepting the loan offer.
- Once you accept the loan offer, you will get your loan amount disbursed into your bank account within a few hours. You can go ahead and utilise the received funds for your individual needs.
Tips to Improve Your LAP Eligibility
If you find it challenging to qualify for a mortgage loan documents, follow these tips to improve your eligibility:
- Since your credit score is one of the most important parameters to determine your eligibility, take steps to improve it before applying to get a more favourable loan plan.
- If your credit profile is not consistent enough to secure a LAP, you may add a co-applicant with a better credit score and lower debt-to-income (DTI) ratio to present yourself as a better borrower.
- Opt for a longer repayment tenure to divide your loan cost into more EMIs, making loan management more effective.
A Loan Against Property is an excellent way to finance your funding needs with land or property you own. Quick online application, fast approval, and ample LTV ratio make it ideal to fulfil your urgent cash requirements. Knowing the Loan Against Property process will help fund your needs with a smooth borrowing experience.
