When it comes to starting something new in life, be it personal or professional, you may need funds for it. While there are several ways to get the desired funds, one of the best ways is applying for a loan against property.
What is a loan against property?
As the name suggests, loan against property or LAP is a type of secured loan where you mortgage your property with the lender against the amount you borrow. The property you keep as collateral serves the purpose of security for the lender. However, the ownership of property continues to remain with you, and you can even occupy or use the premises as per your convenience.
The maximum amount you can borrow against the property greatly depends on the market value of the property you pledge. But generally, the lenders disburse a maximum of 50% of the property’s value as loan.
Also, to get the loan you must fulfil the lender specific loan against property eligibility. Let us look at some of the vital factors that affect your eligibility for LAP.
Age is one of the critical factors that the lenders consider while determining your eligibility for LAP. Most lenders have a minimum and maximum age limit to qualify for the loan. Although it may vary from lender to lender, most lenders need applicants to be aged between 21-65 years.
Also, the younger you are, the better your chances of getting the loan approved without any hassles as compared to someone who is nearing their retirement age.
- Credit history
Another vital factor that the lenders consider while approving a loan against property is your credit history and credit score. If you have maintained a good credit score of more than 700 and have never defaulted on your repayments before, chances are high that you will get your loan approved faster than those who have a lower credit score or have a bad credit history.
Your monthly income plays a vital role in getting approval for LAP. If you have a regular income source, the lender will be assured that you will repay the EMI on time and may not have any apprehension on approving your loan.
Also, most lenders prefer lending to the salaried employees than self-employed as they have a steady income source. So, if you are a self-employed individual, you must provide sufficient proof that you have the necessary income or financial capacity to repay the loan.
- Repayment tenure
The repayment tenure is essentially the loan term, i.e., the period you have for repaying the amount you borrow. Generally, if your income is low, it is better to opt for a long-term loan so that your EMI is spread out and EMI amount is affordable.
- Property related documents
One of the most common reasons why lenders reject the LAP application is that the borrowers fail to produce necessary documents to showcase the property ownership. Typically, the lenders ask for documents like title deed, approval from the relevant authorities, property tax receipts, etc.
If you fail to provide the necessary documents, chances are high that your loan against property will get rejected.
Thus, there are specific requirements that you must fulfil to get your LAP approved. Know about the lender specific eligibility before applying for the loan. This will help avoid the delay in the approval process.