What is Loan Against Property?

A loan Against Property is a secured loan that is sanctioned against the asset pledge as collateral. The Asset can be owned land, a house, or any other commercial premises. The assets remain as collateral with the lender until the entire Loan Against Property amount is paid. A Loan Against Property is sanctioned against a property used as collateral with a lender. This lender decides  the loan amount depending on the property value. Financing institutions  usually provide up to 70%  of the property  value as the loan amount.

Eligibility & Requirements

Repayment Capacity – first of all your eligibility depends on the repayment capacity, what is your annual income, and secondly what are the liabilities of your other loans.

Technical & legal due diligence of property – your eligibility depends on  technical and legal diligence. The bank will calculate your property value. What is the market value of your property and it also checks whether your title is clear or not. All your documentation will be checked, there will be a physical visit, if there is any possession over that property, then it will do all the background check on that property, your eligibility will depend on that too.

Property Value – eligibility also depends on your property value. How much maximum loan can you get? So, generally in case of loan against property, you do not get more than 60% of the property value.

Customer Profile – now comes to the customers profile i.e., what is your profile? Eligibility depends on that. Customers profile means whether you are salaried class or you are self employed, you are a professional own business. Now, in this your occupation and income stability is seen, that how stable your income is and whether your income is coming regularly or not, or there is a lot of fluctuations. If income is stable and your occupation is stable, then you can get good loan eligibility very easily. Your eligibility also depends on your age, if your age is less than you can get more loans, because the tenure will be the maximum. The age limit for loan eligibility is from 24 years to 60 years.

• CIBIL Score – credit score also decides your loan eligibility. So the CIBIL Score is generally calculated out of 900, if your CIBIL Score is more than 750 then, you can easily get any loan sanctioned. Suppose your CIBIL Score is low. So, you should try to increase your credit score.
• Assets & Liabilities – your assets & liability also checked in customer profile, how much are your current assets and whether you can repay the assets or not and how many liabilities are there. So as compared to assets if you have more liabilities, you may still have a problem in getting the loan sanctioned.
• No. of  dependents – no. Of dependent also checked, that if your wife is dependent on you or children are dependent or your parents are also dependent. If your expenses are more. Then you may not get even this 50% EMI sanctioned.

Loan Against Property-Charges

Processing Fee – first of all, comes the processing fee, whenever you apply for the loan, the bank charges a processing fee. That is normally 0.5 to 2% of the loan amount and GST is additional. It is negotiated for a minimum processing fee. You can easily negotiate  for 0.5% maximum bank given 0.5% for processing fee.

Legal & technical due diligence – many banks charge separately  for legal and technical due diligence and some banks do not charge but some banks charge this separately, so whenever you apply in any bank, also find out that for legal and technical due diligence. 

Prepayment & Foreclosure – it means when you prepay a loan before tenor, either you can pay it in full, if you foreclosure charge. If you pay in part, then it is considered in prey payment, then many banks levy charges on pre payments.

Required Documentation

      In a case of salaried person

• Application form with photography due signed
• Residence and age proof
• Last 6 months bank statements
• Last 3 months salary slip
• Processing fee cheque
• Form 16/ income tax return 

      In case of self employed professional

• Application form with photography due signed
• Residence and age proof
• Last 6 months bank statements 
• Processing fee cheque
• Form 16/ income tax return
• Last 3 years income tax return with computation of income
• Last 3 years CA certified/ audited balance sheet and profit & loss account
• Education Qualification certification and proof of business existence.

      In case of self employed non-professional

• Application form with photography due signed
• Residence and age proof
• Last 6 months bank statements 
• Processing fee cheque
• Form 16/ income tax return
• Business profile
• Proof of business existence
• Last 3 years income tax return with computation of income
• Last 3 years CA certified/ audited balance sheet and profit & loss account
• Education Qualification certification and proof of business existence.