Are you looking for a Loan for your business?
What type of loan are you looking for?
Do you think you qualify?
There are humpty number of questions, doubts and series of little questions that pop up in the mind of a business owner who is looking for a Business Loan to improve his business. These questions arise out of fear of rejection of loan even before they can start thinking to apply. The success ratio of getting a loan for business approved quite easily depends on your preparedness and understanding of the requirements. In this article we outline a complete guide and handbook to loan against property for the year 2023-24 which can help you understand the requirements and rules involved. Let’s begin!
What is Loan Against Property?
The loan that you avail from a bank or a NBFC against a property that you own is called Loan against property. In banking terms, it is called mortgage loans where in you mortgage your property for an agreed and qualified sum of rupees for an agreed interest rate and loan repayment tenure. Property can be any registered one both commercial property of individual property. A loan against property can be availed for both personal reasons and business purpose too.
Now that you know what is a Loan against Property and what can you take it for, get to know other pointers about LAP
What is the sanctioned loan amount for Loan Against Property?
Sanctioned amount for LAP depends on various factor however the main criteria being the value of the property. The formula is 65% of the property value can be given as a loan amount however some banks and NBFC’s can extend the percentage up to 85% depending on the property value, its appreciation, repayment capacity, second line of income, investments and credit score. Based on the fulfilment of the criteria the lending institutions will approve the sanctioned loan amount.
Another important thing the lending institutions look in to is documents, let’s take a look.
List of required Documents for Loan Against Property
The very first and important document required for loan against property is the document of the property itself, showing ownership and legal correctness.
Followed by Identity proof, address proof, income proof, educational qualifications, proof of working in an organisation or proof of business in case of running a business, company registration certificate, GST certificate, bank statements and any other supporting documents that a lender may seek.
A processing fee will be levied in case of processing the loan by the lending institutions. Institutions in most cases deduct the processing fee from your loan amount and in some cases may collect it via check or online transfers after the loan is disbursed.
What is the rate of interest for LAP – Loan against Property?
Now, that’s a question where the answers differ from one lending institution to another. The rate of interest varies and is derived based on various factors. One cannot assume the rate of interest and it is advisable to take informed decisions when it comes to interest rates. Check, Compare and Continue with your loan if you are happy with the rate of interest.
Is there a fixed tenure for Loan Against Property?
The tenure of the loan purely depends on the amount, the monthly repayment capacity and maximum it can go up to 20 years as it even depends on the age of the applicant.
LAP – Loan against property vs Unsecured Business Loan
A simple comparison of LAP – Loan Against Property vs business loans or personal loans will give you a clear understanding on the different rates of interest on the loans. An unsecured loan be it for business or personal will definitely be high when compared to a LAP – Loan Against Property. Since the lending institution has a security with them in the form of a property the interest rates will be lower when compared to unsecured loans.
Summary
LAP – Loan against property is an easy approval loan from the lending institutions point of view as they know this is a secured loan. You will get a lower interest rate and longer tenure of repayment under the loan against property. Before applying for a Loan against please ensure you research well about the lending institutions offering various types of loans and schemes. It is highly advisable to have a loan consultant for your business loans and LAP’s. Prudent Capital has a team of experts who can offer expert advice, work on your account and turn your Loan against property dream in to a successful reality. With over 15+ years’ experience in the financial industry Prudent Capital can be your trusted Loan partner.
Faq’s on LAP – Loan against Property
- Can an unemployed or retired person apply for Loan against property?
In such cases the banks or the NBFC’s will check for an income source in any form such as rent from property, pensions, FD’s and so on. If there is an income source it makes it easy for banks or lending institutions to offer a loan.
- Can LAP – Loan against property be availed based on a Joint property?
One can surely get Loan against property approval in the case of joint property if both parties or all involved parties qualify as well as willing to pledge the property. All parties involved will have to sign the consent to mortgage the property. Joint acceptance of all the owners will be the important document for Loan Against Property in this case.
- Are the interest rates fixed in Loan against property?
No, the interest rates are mostly on a variable or fluctuating interest rate model.
- What is the time frame for approval on Loan against property?
It depends on the lending institutions and the documents presented too. On an average it may take a minimum of 20 business days.