The market of loans against property (LAPs) in India is set to grow at a CAGR of more than 14% between FY2020 and FY2026. In terms of value, the market is projected to reach USD857.87 billion approximately by FY2026. This implies that borrowers are increasingly applying for LAPs. How can this kind of loan help them? One can use the funds for both personal requirements (like higher studies, marriage, medical emergency and debt consolidation) and business needs (like expansion and working capital). Apart from this, there are several other things to know about a LAP before you apply for one. So, here are 3 facts to learn about this type of loan if you are a beginner.
3 Facts to Learn About a Loan Against Property
- Your Property Acts as Collateral
The property against which you take the loan serves as the collateral. The property must not be disputed so that it is eligible to be used as a security against the loan. You are required to submit the original documents of the property to the lender when you apply for the loan. Until you pay it off, the documents are retained by the lender. If you can’t repay the loan over the chosen tenure, the lender would take the necessary legal action. So, make sure to choose a suitable loan amount, the EMIs of which are affordable or within your repayment capacity.
- LAP Is a Big-Ticket Loan
If you choose a reputed bank for loans against property in India, you can apply for a large amount between ₹5 lakhs and ₹10 crores. Therefore, you can borrow a significant amount to finance a heavy personal or business-related expense. Since the amount offered is large, the lender also offers long and flexible repayment tenures for the convenience of the borrower. In case your financial need is small, for instance, if you want to fund a small-size business, you can even take amicro LAP.
- LAP Has Easy Eligibility Criteria
A loan against property is available for both salaried applicants like corporate professionals and government employees and self-employed applicants like small-business owners, traders, chartered accountants, lawyers and doctors. In case you possess a plot of land, you can even apply for a loan against land purchase.
The other eligibility criteria are also simple. The following criteria are common for both salaried and self-employed individuals:
- You should be an Indian resident.
You can access either fixed or floating interest rates. The higher your credit score and the value of the property used as security, the lower the interest rate you would be eligible for.
You can qualify for lower interest rates if your wife or mother decides to be a co-applicant of this loan. This is because women are eligible for more attractive loan interest rates to encourage them to be co-owners of properties.
Salaried applicants should earn a minimum of ₹7,000 per month. They should be 28-60 years old. Self-employed applicants must be 28-70 years old.
Benefits of a Loan Against Property
- If you apply for an LAP from a well-known bank in India, you can get the following additional benefits:
- The loan would be disbursed quickly within 72 hours of application.
- You can use an online LAP calculator to check the loan amount you are eligible for and choose a suitable EMI value.
- You can also expect transparency to know about the loan procedure, including all the requirements for documentation.
Wondering LAP or home loan kaise milta hai? Simply visit the website of the chosen bank and learn about how you can apply for the loan and the documents needed for that.
