Loan & Insurance

A Loan against property can be your best bet for achieving your dreams – Moneycontrol

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Your home can be a great enabler for achieving your dreams or taking care of your contingencies? You can avail of funding against the value of your home or any other property that you own. This type of funding is called a “Loan Against Property” (LAP).
What is Loan Against Property?
A Loan Against Property is a secured loan offered by finance companies against any property that you own. You repay the loan in Equated Monthly Instalments (EMIs) for a certain tenure at a rate of interest. The property can be a house, land or commercial premises and is kept as collateral with the lender till the time you repay the loan. The amount of loan that you can get depends on the value of your property as assessed by the lender.
Uses of Loan Against Property

    • Managing working capital in the business

Process for a Loan Against Property
Once you apply for a LAP, the lender assesses your property (either directly or through a certified valuer). Depending on the age of the property, its physical condition, location, ownership documents and other factors, the lender (or valuer) arrives at a certain value for the property. This value could be different (higher or lower) from the market value of your property. The loan offered to you is a certain proportion of this value, called as Loan-To-Value (LTV). Lenders generally offer LTV of 70-80%, depending on the factors mentioned earlier. For example, if the value arrived at after assessing your property is Rs. 50 lakh and the lender offers you a loan basis an LTV of 70%, then you will get a loan of Rs. 35 lakh.
Features and benefits of a Loan Against Property
 
Eligibility criteria for Loan Against Property
The broad eligibility criteria for a Loan Against Property are:
• For salaried individuals
o Minimum 1-year work experience with a public or private company and 2 months with the current employer
o Age minimum of 25 years at the time of application and maximum 65 years at loan maturity
o Minimum take-home salary of Rs.25,000 per month
o Indian citizenship
• For self-employed individuals
o Minimum of 1-year post qualification experience
o Proprietor, partner, director, or a professional such as CA, CS, or doctor
o Age minimum of 25 years at the time of application and maximum 65 years at loan maturity
o A minimum gross annual income of Rs. 3 lakh
o Indian citizenship
• For firm/company
o Partnership or private limited company
o Age minimum of 25 years at the time of application and maximum 65 years at loan maturity for the proprietor, partner, or director of the company
o Minimum annual turnover of Rs. 10 lakh
o Business vintage of at least 3 years
o Proprietor, partner, or director must have Indian citizenship
The documentation required for getting a Loan Against Property is simple. You just need to furnish the following documents:
• KYC – PAN card, Aadhar card, PAN card of the company, KYC documents of partners or directors
• Address proof – electricity bill, rent agreement, passport
• Income documents – latest salary slip, 2-year IT returns, P&L statement, and balance sheet for past 2 years
• Bank account statement for past 3 months
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