LOAN AGAINST PROPERTY

A loan against property (LAP) is exactly what the name implies — a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property's market value, usually around 40 per cent to 60 per cent. Loan Against Property can get you a higher loan amount for your business or personal needs with the benefit of lower EMI. With easy documentation.

HOW DOES IT WORK?

The tenure for a loan against property is usually longer than that for a personal loan. Generally, LAP is given for a maximum tenure of 10 years. Since the rate of interest is lower, many a times, LAP equated monthly instalments turn out to be cheaper than those under personal loans.

LAP, just like a personal loan, can be taken for any reason. The motive for borrowing does not have to be disclosed to the lending institution. Also, the criteria for LAP are the same as those for any home loan. Part prepayment as well as full prepayment of LAP is also allowed by most lending institutions; many lending institutions do no levy extra charges on prepayment.

Some financial institutions make LAP available only under the floating rate. Fixed rate loans are off limits. Borrowers need to enquire before finalising a LAP from lending institutions.

The 'technical inspection report' of the individual's property needs to be in order. This report qualifies the merit of the property to be mortgaged. Otherwise the LAP could be rejected. Some financial institutions also have a floor on the area of the property to be mortgaged. For example, the area has to be say, at least 400 square feet for the FI to give a LAP.

LOAN AGAINST RESIDENTIAL, PLOT, COMMERCIAL, INDUSTRIAL PROPERTY

DOCUMENTS REQUIRED FOR AGAINST PROPERTY

Documentation Checklist

• Proof of Identity and Signature
• Proof of Address (Office & Residence)
• Income Documents:
  1. Salaried : Latest 2 salary slips and last 2 years IT Returns / Form 16
  2. Self Employed Professionals : Last 2 years IT Returns with computation of income, audited Balance Sheet and Profit & Loss account including tax audit report if applicable and proof of turnover vide latest sales / service tax returns
  3. Self Employed Businessmen / Retail SME Enterprises : Last 2 years IT Returns with computation of income, audited Balance Sheet and Profit & Loss account including tax audit report if applicable and proof of turnover vide
     latest sales / service tax returns
     Last 6 months bank statement of salary / main operating bank account
     Details of all existing loans
• Copies of all property documents
• The check list is only indicative and not exhaustive. Depending upon the local requirements at different places addition could be made as necessary.