The need for financing can arise at any time, and when it comes to business, the sum is generally very large, and it can become extremely difficult to arrange finances in a short period. In conditions like this, lending institutions provide a terrific alternative known as a loan against property. You can use residential, industrial, or a combination of the two properties as collateral for this loan. You can supply security ranging from buildings and lands to business premises, industries, stores, and flats.
The interest rate on loan against property is relatively low because it is a secured loan and you are offering your property as collateral. As a result, your EMIs will be smaller and more reasonable as compared to personal loans. It is also super easy to get. All you got to do is check your loan against property eligibility, submit required documents, and wait a few minutes for approval. Once your loan is authorised, the funds will be transferred into your bank account, where you can utilise them for multiple purposes. For a detailed review of this loan, please move forward to the next section of this post.
A loan against property is one of the cheapest loans available and is beneficial to many individuals. But why are these people you can apply and get benefits of this loan? The following is a list of individuals who can exert a LAP:
- Business entities
- Self-employed professionals
- traders and
- service providers
What Are The Factors Influencing Mortgage Loan Eligibility?
You should know that certain factors influence your eligibility to avail of a mortgage loan. Here are the details of those factors:
- Income stability: If you do not have a consistent income or generate money through speculative ways, you have fewer odds of securing a loan against your home.
- Age criteria: Your income potential reduces as your age grows. As a result, financial institutions are more inclined to lend to young people starting a career or business than individuals nearing retirement or already retired.
- Working status: Salaried employees have a set salary, contrary to enterprises or self-employed people, whose wages fluctuate depending on market circumstances. Given this risk, the lenders give higher priority to salaried individuals.
- Residential status: The location of your property matters a lot. As loans on agricultural land or property that have not been approved by the government are not permitted by lending institutions.
The loan against property eligibility is outlined below. Anyone wanting to apply for this loan must meet these requirements.
- To apply for a loan against property, you must be a citizen of India.
- Only self-employed individuals are eligible for this loan.
- You must fall under the age bracket of 25 to a maximum of 75 years.
- If you are a salaried individual, then your application will be rejected.
- Up to 15 years of flexible tenure
- Payment terms will not be prolonged after the borrower retires or reaches the age of 60.
- You are only eligible to borrow a maximum of 75% of your property’s market value.
- You must have been in your present business for at least three years.
- There are no criteria for a fixed monthly income.
Once you are eligible, your maximum loan amount for LAP is determined by numerous criteria such as your profile, property type and so on.
You must have the following documents on hand before applying for a loan against property:
- Compulsory submission of PAN card
- A filled out application form
- Anyone document issued by the government of India from Aadhar cards/ voter ID/ passport/ driver’s license/ photo ID
- Address proof from Registry Copy/ Voter ID Card/ Driving licence/ Agreement of rent or lease/ Property Tax Receipt/ Aadhar Card/ utility bill
- For business evidence, you have to submit excise tax/ sales tax/ registration of service tax/ VAT and certificates of practice, Copy of partnership agreements, trade license and registration certificates issued by the RBI or SEBI.
- You will have to submit any of the following documents as signature proof: banker’s verification/ passport/ PAN card.
- For income proof, you have to follow the following documents: Income Tax Returns (ITR) for the previous three years, bank statements for the past six months, Proof of business continuity over the last three years and last three years income statement, profit and loss statement, and balance sheet.
- Lastly, a complete property-related document chain is property-related documents.
A loan against property is particularly appealing since it can be secured at relatively low-interest rates. The loan amount is also substantial, which may benefit you in several ways, such as growing your business, maintaining cash flow, or financing a new project. The reasons might be anything, but the procedure is equitably straightforward. We recommend you check the loan against property eligibility before applying for this loan so that you don’t run into any problems throughout the application process.