The loan against property market in India is likely to register a CAGR of 14% in terms of value to reach $857.87 billion by FY2026. This data reflects the current popularity of this financial, and it is primarily due to the facilities it offers. This includes a substantial loan quantum, longer loan tenor, and affordable interest rates.

Nonetheless, before going ahead with the application process, individuals should learn about the loan eligibility criteria for a loan against property and other details to avoid rejection.

Eligibility Criteria of a Loan Against Property

Here are the eligibility criteria for loan against property that one needs to meet to avail funds –

• Age: 25 to 70 years
• Employment type: Salaried and self-employed
• Monthly income: Depends on the requirement of a financer

Apart from these, the property’s location also plays a part in determining the eligibility of a loan against property. Besides meeting these parameters, one needs to consider additional requirements put forth by a lender and successfully meet them to avail credit.

Besides meeting these aforementioned eligibility criteria, one also needs to submit the required documents to complete this process.

Documents Required for a Loan Against Property

Here are the set of documents that one need to keep handy to get this financial product –

1. KYC papers
2. Address proof
3. Employment details (office ID cards and proof of business)
4. Income proof (Salary slips, IT return papers for salaried individuals, profit and loss document of the business for self-employed individuals)
5. Property papers and title documents

Apart from knowing the eligibility and documentation of a loan against property, one should also learn how to apply for it to avoid making mistakes during the process.

A Step-by-Step Guide on the Application Process of a Loan Against Property

Here is a detailed explanation of the application process of a loan against property–

• Step 1: Visit the official website of a lender
• Step 2: Navigate to the application form of a loan against property
• Step 3: Fill out the form with relevant details and submit it
• Step 4: You will receive an initial confirmation of your loan against property application
• Step 5: Submit the required documents afterwards
• Step 6: A representative from the lender’s end will contact you for further loan processing and property verification
• Step 7: After that, you will get your final approval and the loan amount in due time

On the contrary, leading financial institutions extend pre-approved offers to their existing customers. Applicable on financial products like loans against property, home loans and many other credit instruments, these offers streamline the loan application process and save time. Borrowers can check their pre-approved offers by submitting their contact information. The type of investment your property backs, like residential or commercial, can significantly impact your eligibility criteria for a loan against property.

Alongside the knowledge of LAP’s fundamentals, such as eligibility, documents and application process, one should also learn the features of this financial product and make a decision accordingly.

Features of a Loan Against Property

Here are some notable features of this financial product –

• High loan quantum

The available loan quantum here is substantial. Typically, the LTV ratio in the case of a loan against property is high and can go up to 75% to 90% of a property’s market value. It means, if you pledge a property worth Rs.1 crore, you can get a maximum loan amount of up to Rs.90 lakh.

• Affordable interest rate

Being a secured loan, the interest rate applicable on a loan against property is comparatively cheaper. Moreover, the recent reduction of policy rates by the RBI has lowered the current loan against property interest rate. The Central Bank’s role in shaping Eligibility Criteria for Loan Against Property involves maintaining financial stability by setting key parameters like minimum loan-to-value ratio and risk weightings for banks. Resultantly, the borrowing cost of a loan against property has lowered, enabling more individuals to take advantage of this financial product.

• Long repayment tenor

Another notable feature of a loan against property is its long repayment tenor. Here this period can extend up to 20 years, and in some cases, it can increase as well. This makes repayment hassle-free and affordable.

In this regard, individuals can take the assistance of an online EMI calculator for a loan against property to find a monthly instalment that will suit their repayment. Additionally, online devices like these come with a loan amortisation schedule, which offers a detailed break-up of EMIs, and help borrowers in their financial planning. Some SaaS products can help lenders streamline the eligibility criteria assessment for loans against property applications, leading to faster and more efficient loan approvals.

• No end-use restrictions

While talking about the advantages of this financial product, one must know that it comes without any restriction over its usage. It means, unlike its other secured loan counterpart home loan, where one can only use the funds to purchase a property, there is no such restriction here.

It means individuals can use these funds to meet an array of financial obligations, such as medical expenses, higher study, business expenses and likes.Being aware of the loan against property eligibility criteria, and its documentation, and the features extended by this financial product aid individuals to find a suitable loan deal. Furthermore, one should also go through loan terms and conditions to avoid future complications.