Often it is seen that some loan borrowers do not have much of an idea about LAP loan, how can be taken, what is the rate of interest, how one can apply for the loan and much more. In this article, we will be providing a brief idea about loan against property and some more factors related to it.
As mentioned earlier, Loan against property is one of the safe and secured modes, through which one can get their needs served easily. The main key points or benefits of this scheme are:
- The rate of interest is quite low in comparison to other modes of financial loans, that can be paid off easily.
- After approval of the loan, the borrower can own the property or land and can use it.
- The loan repayment tenure is much longer so that one gets enough time to clear off the loan amount slowly.
- A proper loan agreement is sanctioned with all the necessary information for future reference and security.
Loan against property can only be applied and approved only if the necessary documents are produced to the lenders. Without proper documentation and authenticity, the loan will not get approved by the lender. The required documents for the same are:
- Individuals have to show regular income
- Latest income slips or salary slips have to be produced
- The latest 3 bank statements have to be produced to the lender
- Submission of form 16 by the employer
- Proof of identity
- Proof of address
- Proof of continuity of employment or business
- Valid papers of the property that will be put to a loan or mortgaged
If one, opting for a LAP loan has all these documents ready, will get the loan sanctioned easily by the lender.
Now you might be thinking, how will you know if you are eligible for a LAP loan? The answer is quite simple, if you can fulfill the eligibility criteria, then you will surely get the loan sanctioned!
The Eligibility Criteria for LAP loan for an individual
- A borrower has to be within 18-70 years
- Have to be a citizen of India
- Should have a regular monthly income like a monthly salary
- The loan tenure has to be at least 15 years
- A monthly income of at least 25,000 has to be there
- The individual has to be salaried for at least 3 years
- A good credit score history
Individuals can check their eligibility online as well as using the eligibility calculator.
The Procedure of LAP loan
The process of applying for a LAP loan is very easy and hassle-free if all the necessary documents are kept ready and produced at the time of need. It can be both online and offline as well. Some more points to look into are:
- The LAP loan application form has to be filled
- The required documents have to be submitted
- Verification will be done by the lender, as per the documents provided
- The final evaluation of the property, that would be put against loan, will be done
- Then, after all these steps, the loan will be approved. The letter of approval of the loan has to be received from the lender.
The Interest Rate of LAP loan
The interest rate varies from lender to lender, be it banking or non-banking sectors. But the
Loan Against Property interest rate in India is 7.90% with a processing fee of 1% on the total loan amount. The tenure of the loan is 15 years at least and there are no such pre-payment charges.
What is the concept of loan against property calculator?
The loan against property calculator is a very effective tool for managing your loan account. It can easily be checked online with just a click.
The calculator looks like this (pic shown above)
Some key benefits of using a Loan against property calculator are:
- It helps you in keeping a track of your regular EMI payoffs
- Is free of cost and is accessible 24*7
- One can try different combinations of loan amounts, based on your income, rate of interest and check the amount of EMI you have to pay, the tenure and much more
- It is very easy to use without any hassle
- The result is produced within seconds after entering the details
- Allows one to keep a track of their existing loans as well
What is meant by Cibil Score?
In simple words, Cibil score of an individual is nothing but their credit score. These days, often it is seen that people take credits and loans to fulfill what they want in life. Not only this but in case of emergencies also people have to take this policy as well.CIBIL score or credit score measures an individual’s credibility based on their records of borrowing and clearing off the credits taken. This matters much in case of approval of loans by the lenders as one having a bad credit score will have to face a lot of difficulties while getting their loans sanctioned. One has a bad credit score, if he/ she fails to clear their dues on time, borrows quite often, has no regular income or lacks in proper documentation etc. The future actions of an individual are determined by their records in case of loan approval.
A CIBIL report is a document with the overall information of an individual including their personal and professional information, payment histories, credit scores, information on loans and much more. This report is a very crucial document when spoken about loan against property or land approval by either banking or non-banking sectors.
The factors that affect a credit score are:
- Loan payments made late
- Excessive use of credit balance
- Multiple loan accounts
- Lacking authenticity of information
You can also get a free credit report online within seconds with accurate information of your past payment records.
We have discussed much on LAP loans, now let’s discuss the common mistakes that every borrower tends to make in terms of loans.
Here, we would try to showcase the mistakes and be a guide to the people who will opt for loans in the future.
- No proper research- Before opting for a loan, one should do proper research of which would be the best place to take the loan from with low rate of interest and more years of paying off.
- No comparative analysis- A comparative study of the lenders is a must before opting for a loan is a must. Comparing the rate of interests and schemes and offers of various lenders will help an individual get the best benefit.
- Loan agreement negligence- Loan agreement is a very essential document that should be preserved.
- Not focusing on credit score- Having a good credit score always adds an advantage. So good credit score holders get the loan sanctioned very easily rather than the ones having a bad score.
- Lack of proper documentation- Providing authentic and valid documents is a must. Without proper documentation, the loan will never be issued. This may also add to your credit score report and creates a positive impact on the lenders in terms of loan sanctioning.
Also read : Home Loan Balance Transfer
Q. Which banks are best for LAP loans?
People generally opt for banking sectors for their LAP loan sanctioning, because of security and the rate of interest that they provide. Among various banks, two reputed banks, that come with a handful of benefits are:
SBI loan against property
SBI has been quite successful in making the dream of having a new home for their customers come true. With a low rate of interest and processing fee, the loan against property from this reputed bank is worth. SBI maintains a very good transparent process of loan processing and also without any charges on pre-loan payments.
The loan against property is approved, with a minimum amount of Rs.10 lacs till 7.5 Cr. Individuals from age 18 till 70 years are eligible for the loan
HDFC loan against property
HDFC is one such banking sector that has always brought a smile on their customers face with their services. The easy and transparent method of loan processing has made this reputed organization stand out of the crowd. With a low rate of interest, starting from Rs. 8.75% and processing fees till 1%, one can opt for a LAP loan up to 15 years. From an age of 24 years, one is eligible for a loan till 65 years of age. The main criteria are to have a regular flow of income or salary so that they can pay off the loans easily.
Q. Can a loan be sanctioned without income proof?
Yes, it can be done, only if a co-applicant can be present with their earning details and a valid proof of monthly income and also if an individual maintains a good credit score, it’s an added advantage. Thus, one can easily avail a loan against the property if all the other documents are authentic as well.
Q. Can a loan against land be approved?
Only an agricultural loan can be issued. Vacant or empty land will not get any loan sanctioned. Also, a land which is ready to build is eligible for a loan.
Q. What is the disbursal time of a loan?
Not more than 24 hours. As soon as the application is submitted the required loan amount is disbursed in the borrowers account within a day.
Q. Can I apply for a loan with my husband?
Yes, you can. If you add an incoming applicant with you, that would, in turn, increase the eligibility of getting a loan approved.
Q. How can I apply for a loan with a negative credit score?
One with a bad credit score can apply for a loan but then lenders might be at an advantage and charge a high rate of interests on your EMIs. Some lenders might ask to present another incoming applicant as well, who can be responsible for paying off the loan later on.
Q. Can I increase my EMI for a loan?
The process of EMI is quite flexible and one can easily alter the amount anytime they want. But again it depends on lenders.