You invest a good part of your savings in buying a property. Well, there are circumstances when you face unforeseen financial crisis in your life. Subsequently, you need urgent fund for your child’s education, expanding your business, managing wedding expenses, handling unanticipated medical expenses. At this time, Loan Against Property (LAP), a multi-use loan can help you. You may avail this by mortgaging your existing residential or commercial property. However, funds should be used for only a justifiable purpose. Subsequently, this would help you to meet the financial crunch. Without a doubt, now you want to know what LAP exactly is?
Loan Against Property (LAP): What is it?
This is nothing but a secured loan, which you avail by keeping your commercial/residential property (immovable asset) as collateral with the lender. Subsequently, it comes with flexible repayment tenure up to 20 years.
Documents Required for Loan Against Property
Any Salaried, Self employed individuals, Partnership firms and Private Ltd companies may avail this.
Documents for Salaried:
- Application Form with photograph duly signed
- Identity proof (Passport, PAN card, Voter ID Card, Aadhaar Card, or any other government ID)
- Address proof (Aadhaar Card, Voter ID Card, Utility bill, Passport, Ration Card, or any other address verification issued by the government
- Salary slip – latest
- Last 3 months’ bank account statement
- Income Tax returns
- Documents of property you give to the creditor as security
Documents for Self-employed:
- Application Form with photograph duly signed
- Address proof (Aadhaar Card, Voter ID Card, Utility bill, Passport, Ration Card, or any other address verification issued by the government
- Business profile
- Proof of business stability/existence
- Latest 3 years’ Financials :
a. Computation of Income b. Balance Sheet and Profit & Loss Account (with Schedules and Audit Report) – Audited or CA certified - Documents of property you give to the creditor as security
How the Creditors Calculate the Eligibility for LAP?
The eligibility for LAP is calculated considering the financials of the buyer and the value of the property being offered as security.
Types of Properties That Can Give as Collateral
If you are in urgent need of cash, you may mortgage both residential and commercial property for availing LAP. However, you need to ensure that, the property you choose to mortgage should be free from any charge. Most importantly, there should be no other loan running on the property offered as security.
What Percentage of the Property Value Can Be Availed for Loan Against Property?
The percentage of the property value depends on the lender, the property type and other parameters. However, generally you may avail up to 70% of the property value as LAP.
Computing the EMI
There are online EMI calculators available. You just need to enter the loan amount, rate of interest and loan tenure to compute the EMI for your Loan against Property. In other words, online calculators are the easiest ways to make out your monthly instalment amount on your loan.
Repayment
Higher loan amounts come with longer repayment tenures. Besides, the lenders offer you attractive interest rates. Furthermore, with reasonable interest rates, you (applicant) can repay the loan in low EMIs easily.
To Sum Up
If you’re experiencing a financial crunch and have a commercial or residential property which you can offer as collateral Let your property take care of your needs.
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