The COVID-19 pandemic has brought the world economies on their knees. Small businesses have adversely been impacted, and with the shortage of funds, people are resorting to secured and unsecured loans to meet financial requirements. In such cases, loan against property has gained popularity.
Loan against property (LAP)
It is a secured loan that uses the property as collateral and a high loan amount to meet certain expenses. The loan amount is dependent on the value of the property. However, you can anyway continue using the property as you see fit.
The maximum loan amount that comes with a low loan against property interest rate is why people are opting for home mortgage loans rather than other secured loans. Also, the loan tenure is flexible, which means it doesn’t put any burden on your budget.
Here are certain benefits of acquiring a loan against property
- Attractive interest rate
The loan against property interest rate is comparatively low as it is a secured loan, due to the property pledged as collateral. It allows the borrower to address other financial needs without putting any burden on his budget.
- Maximum repayment tenure
Generally, you can repay the loan amount acquired from the loan against property within 15 to 20 years. The longer loan tenure also brings down EMI payable every month.
- Continuous property ownership
The best part about a lap loan is that you can avail of the loan amount and use it for several purposes and continue to own and use the property. It would allow you to continue generating income. However, it is important not to default on payment.
- Eligibility Criteria
The eligibility criteria for a salaried person are different from a business. For a salaried individual, the banks fix an annual income, that is mandatory to meet, whereas a business needs to show certain turnover to avail of the loan. There is also an age limit that applies here. However, since the borrower’s property is pledged as collateral, the requirement is minimum.
Documents required for a mortgage loan
You must furnish the below documents required for a mortgage loan to be avail of the loan without much hassle. Upon submission of these documents, you can get the loan amount in a matter of 3 days.
A salaried individual needs to provide the following documents.
- Residential proof: Ration card, telephone bill, electricity bill, or voter’s ID card.
- Identification proof: Aadhaar card, passport, electricity, or voter’s ID card.
- Latest salary slip.
- Bank statement (Showing previous three months’ record).
- Income tax returns or form 16 for the preceding two years.
- Relevant copies of the pledged property’s documents.
A self-employed individual needs to provide the following documents.
- Residential proof: Ration card, telephone bill, electricity bill, or voter’s ID card.
- Identification proof: Aadhaar card, passport, electricity, or voter’s ID card.
- Bank statement (showing previous six months’ transaction record).
- Relevant copies of the pledged property’s documents.
So, before applying for a loan against prosperity, you must ensure that you meet the eligibility criteria and have all the documents required for a mortgage loan to get your loan approved quickly.