Lenders provide loans secured by the borrower’s property to help borrowers weather economic downturns or fund financial emergencies. These loans become available once you mortgage your property, either residential or commercial, and are better than unsecured personal loans because of lower interest rates and the longer tenor involved.
LAPs are one of the most popular loans in India because of the cheaper interest rates and the competition in the loan market has made them even more affordable. LAP is not only cheap but they are also easy to get and pay back. This is because when you get a LAP, you put a mortgage on a piece of real estate and real estate prices rarely go down, making them much safer for lenders.
Loan Against Property Eligibility
Almost all salaried professionals, self-employed professionals and self-employed business people can get loan against property from lenders. Here are a few loan against property eligibility criteria. The applicant must:
- Be a citizen of India
- Be at least 21 years old when the loan application is turned in.
- Have worked for their current company or must have been involved with business for a certain amount of time.
- Have the minimum salary or ability to pay back each month
- Have made timely payments on other loans and credit cards for the previous three months before applying for this one
- Have a CIBIL score of 700+
Loan Against Property Eligibility Calculator
The loan against property eligibility calculator helps you figure out how much of a loan you can get based on the value of your property and how much money you make every month. In this way, you may manage your money better if you know when your EMIs are due.
Loan Against Property Tax Benefits
If you take out a loan against property, you may be able to reduce your taxable income. Here’s how:
Tax Benefit Under 24 (B)
Salaried people can use the Loan Against Property tax benefits thanks to this section. If you use the Loan Against Property amount to pay for your new home, you can get a tax break of up to INR 2 lakh. Tax deductions can be taken for interest payments.
Factors Affecting Loan Against Property Eligibility
Here are a few things that affect whether or not you can get a loan against property:
When you apply for a loan against property, you must be of a certain age. Most of the time, the applicant should be between 65 and 70 years old by the time the loan is paid off.
Income of the Applicant
To make sure that the loan will be paid back, the applicant must be able to show that they have a steady income.
Value of the Property
The loan amount will depend on how much the property is worth.
Lenders will look into a person’s CIBIL score to make sure they have a good track record of paying back loans.
The applicant’s eligibility is partly based on how stable their job is, whether they are salaried or self-employed.
Documents That Must Be Submitted For Loan Against Property
Here are some of the most common documents that financial lenders will want to see:
- Proof of identity, such as an Aadhaar card, a passport, or a voter’s ID card.
- Proof of address, such as a passport, ration card, driver’s license, etc.
- Proof of income, like pay slips, bank statements, and so on.
- Form 16
- Property documents such as Registration certificate, Sales Deed, Lease Agreement, Property Tax Receipts, Property Insurance Documents, etc
Loan Against Property Interest Rates
Interest rates on Loans Against Property range from 8% p.a. to 25% p.a. With LAP, you can get loans for up to Rs.25 crore for up to 20 years.
Both your application’s approval and the interest rate that may be provided to you depend on a number of different factors. Let’s look at what they are.
Your CIBIL or Credit Score
Your credit score is a three-digit number between 300 and 900 which shows a lender how trustworthy you are. A credit score of 750 or higher is ideal to get a good interest rate.
Borrower’s Financial Profile
The borrower’s profile also affects whether or not they can get a loan and how much interest they will pay. Lenders look at your age, the type of work you do, where your income comes from, where you live, and if you’ve taken out loans before and how you paid them back, etc., when deciding whether or not to give you a loan.
Lenders pay a lot of attention to the type of property used to get a loan. The lenders have surveyors look at the property to see what kind it is (residential or commercial), how old it is, where it is, and how much it is worth on the market right now.
The interest rate on the loan will also depend on how long it will take to repay. The interest rate on these loans is lower because the time it takes to pay them back is longer, like 15 to 20 years. The borrower can choose to pay back the loan faster by choosing a shorter term. But when this happens, the lender usually charges a higher interest rate on loans that are backed by property.