Types of Loan Against Property

The types of Property against which LAP can be availed:

• Self-owned residential property
• Self-owned and self-occupied residential property
• Self-owned but rented residential property
• Self-owned piece of land
• Self-owned commercial property
• Self-owned but rented commercial property
• Customers today avail loan against a property for numerous reasons. It could be anything from a foreign trip, big wedding, education of your children, or simply to expand your business. Purchasing a new property, renovating existing property, loan consolidation, balance transfer of existing HE/LAP and business or working capital requirement also from the bases of the need for a LAP.

Benefits of Loan Against Property

•  Lower interest rate

As the loan is taken keeping the property as collateral, the rate of interest is generally lower when compared to personal loan. Loan against property interest rates generally ranges between 12% and 15% while in case of personal loan the interest rate ranges is 15% to 25%

• Lower to no prepayment charges

You can close your loan against property by making prepayments towards your loan. Lenders generally don’t charge prepayment charges in case of loan against property.

• Easy to get

As these are secured loans, banks are more than willing to provide these loans. Therefore, you won’t find it very difficult to get the property loan.

• Longer tenure

These loans are generally available for longer tenure going up to 15 years while the tenure in case of personal loan is generally up to 7 years.

• Lower EMI

There is an inverse relationship between tenure and EMI. Longer the tenure lower will be the EMI and vice versa. As these are available for longer tenure, these become suitable for people who can’t afford paying higher EMIs. However, it is always advisable that a person should take loan for the shortest tenure as the interest burden will be lower in case of short tenure loan.

Documents Required For Loan against Property

For Salaried Employees

Proof of identification (any one of the following):

• PAN card
• Passport
• Driving License
• Voter’s ID
• Employee ID
• Bank passbook
• Ration card

Address proof (any one of the following):

• Passport
• Utility bill (telephone, electricity, water, gas) – less than 2 months old
• Letter from a recognized public authority verifying the customer’s residence address
• Bank passbook or Bank account statement
• Voter’s ID
• Ration card
• LIC policy/ receipt

Residence ownership proof (any one of the following):

• Property documents
• Maintenance bill
• Electricity bill

Proof of income (any one of the following):

• Payslip (Last 2 months)
• Increment or Promotion letter
• IT returns (for 3 years)
• Form 16
• Certified letter from Employer

Proof of job continuity (any one of the following):

• Current job appointment letter (if more than 2 years have been spent in the same job)
• Current employment certificate
• Experience certificate (including previous job certificate or appointment and relieving letter)
• Bank statement: Last 6 months bank statements of salary account
• Existing loans: In case of any existing loan, need to submit sanction letter, payment track record
• Investment proof (if any): fixed deposit, fixed assets, shares, etc.
• Copies of all property documents: Sales deed/copy of Agreement, share certificate (if society formed), latest maintenance bill
• Advance processing cheque: to process loan documents for sanction

For Self-Employed

Proof of Identification

• Address Proof
• Residence ownership proof (any one of the following):
• Property documents
• Electricity bill
• Maintenance bill
• Office address and ownership proof (any one of the following)
• Property documents
• Electricity bill
• Maintenance bill
• Proof of business existence (any one of the following)
• Sales deed/ agreement (executed)
• Saral copy (3 years old)
• Copy of tax registration
• Company registration license
• Proof of Income (any one of the following):
• Last 3 years Income tax returns of the applicant along with computation of income duly attested by a Chartered Accountant
• Audited balance sheet and Profit & Loss accounts, including tax audit report, if applicable
• Bank statement: Latest 1 year bank statement (both savings and current)
• Copies of all property documents: Sale deed/copy of Agreement, share certificate (if society formed), maintenance bill
• Advance processing cheque: to process loan documents for sanction
• Passport size, coloured photograph
• Investment proof (if any): fixed deposit, fixed assets, shares, etc.
• Existing loans: In case of any existing loan, need to submit sanction letter, payment track record
• Professional Degree Certificate: (in case of professionals).