Among the various loan products that banks & finance companies offer consumers, a relatively popular one is loan Against Property (LAP) or mortgage loan. This product allows borrowing a relatively large sum of money to meet their financial needs. LPA come with easy documentation process, speedy approvals and flexible repayment options.
Loan Against Property or mortgage loan is they popularly known comes to needing money for your business needs, marriage, medical expenses and other personal needs. Transferring your outstanding loan availed from another bank or financial institutions.
While people can utilize money for children’s higher studies, and even buy/build an additional property like a bungalow in native or popular hill station, most mortgage loans are taken for business purposes. It is especially helpful if the business is in need of emergency cash at lower interest rates.
Traditional financers are far too costly, with stringent payment measure and unexpectedly less time for repayments. Therefore, people can keep their property mortgage to derive a loan at low interest rates and flexible ways of repayment with ample time to repay it.
Borrower can apply for loan against property from bank or finance company by extending the property as a collateral or security. After a thorough background check such as property conditions, place situated at, your income source, credit score and other crucial parameters bank or NBFC grant a loan. Ideally, you qualify for around 60 to 65 % of the property value. This is because banks or finance companies want to stay sheltered against any cyclical fluctuations in the real estate markets and a drop in prices.
In LAP higher loan amounts are generally available for longer tenure when compared to conventional loans and at discounted interest rates. Most banks accept both residential as well as commercial properties to grant loan.
To fulfill the eligibility criteria banks or NFBCs generally demand proof of residence, proof of identity, latest Bank Statement which displays your salary / income for the past 6 months, salary slip if employed, and relevant copies related to your property. In case you’re self-employed generally the certified financial statement for past 3 years would be required.
The loan eligibility of depends on borrower’s credit rating along with factors like income source, co-applicant income, age, qualification, number of dependents, assets, liabilities and job or business consistency. Once the loan against property is approved it gets disbursed in full amount or in installments as instructed by the borrower. You can often choose between fixed and floating rate of interest. There are some leading private finance companies that offer loan with floating rates as low as 9.60 to 11.60% with mere processing fee up to 1.25% on the mortgage loan.
With internet facilities, you can shred the age old patterns of visiting banks or NBFCs, collecting brochure/pamphlets and then jotting down features to choose the best interest rates. With online comparison sites you can check interest rates, flexible repayment options, processing fees of different banks or finance firms. Once you shortlist the bank or finance firm you can visit their website, fill up form, getting copies attested and submit scanned copies online. Within a week’s time you will get to know about the status of your loan application. Ideally, if things are in place bank/NFBCs will disburse the loan in next 3 to 5 working days in your bank account.