Loan against property (LAP) or mortgage loan has become popular among borrowers owing to its special benefits that they enjoy down the line. It is a type of secured loan wherein the borrower has to collateralise his/her asset to the lender to get the credit amount.
If an individual plans to avail this credit option for the first time, they must check their mortgage loan eligibility beforehand. However, when it comes to a pre-approved mortgage loan, it is only offered to the existing and trustworthy customers of the lender.
How can borrowers know if they are pre-approved for a mortgage loan?
In case of pre-approved loans, the lending institution already has an offer for the respective borrower before he/she applies for credit. These types of loans are provided mainly to the reputed customers who have availed a loan from that lender earlier and have retained a good credit history and track record in repayment. Thus, if a borrower already has a good relationship with the lender, he/she will automatically get notifications about pre-approved mortgage loan offers.
Many reputed lending institutions provide personalised pre-approved credit offers to their existing borrowers. Such offers are available on secured financial products like home loans, loan against property, etc. and unsecured financial products like personal loans, business loans, etc. The existing consumers can easily verify their pre-approved offers by inserting their name and contact details. Pre-approved mortgage loans require minimal or no documentation since they are offered only to existing customers with clean credit records.
However, when it comes to first-time applicants, they have to meet their eligibility criteria and submit the required documents accordingly.
Eligibility criteria for loan against property
Individuals should fulfil the necessary mortgage loan eligibility criteria as stated by the lender before getting a pre-approved loan:
For self-employed borrowers
- Applicant must be an Indian citizen
- Age of borrower should be between 25 years and 70 years
- An applicant must have a steady income alongside a business experience of minimum 5 years.
For salaried borrowers
- Applicant must have Indian citizenship
- Age of borrower must be between 28 years and 58 years
- An applicant should possess at least 5 years of working experience at a public, private, or MNCs
However, borrowers should know that these eligibility parameters vary from lender to lender. After meeting the mortgage loan eligibility criteria, borrowers should gather the required documents to ensure a smooth application process.
Documents required for loan against property
Following are the documents required to be submitted at the lending institution by self-employed and salaried borrowers while applying for a property loan:
- Identity proof (include PAN card, passport, Aadhaar card, voter ID card, etc.)
- Address proof (Aadhaar card, voter ID card, telephone bill, energy bill, etc.)
- Income proof (profit and loss account, bank account statements for last 6 months, and balance sheet)
- Income Tax Returns (ITR)
- Business proof documents (partnership deed, certificate of incorporation, etc.)
- Property papers
- ID proof (Aadhaar card, PAN card, ration card, etc.)
- Address proof (Aadhaar card, electricity bill, voter ID card, ration card, etc.)
- Income proof (latest salary slips of last 3 months, bank account statements for last 3 months)
- Property documents
- Form 16
- Income Tax Returns (ITR)
First-time applicants eligible for pre-approved loans have to follow the application process for property loans.
What are the steps to apply for a loan against property?
Following is the easy step-by-step process to apply for a loan against property:
Step 1: Navigate to the official portal of the preferred lending institution
Step 2: Go to the ‘Loans’ section and select the ‘Loan against property’ option
Step 3: After this, select the ‘online application form’ for a property loan
Step 4: Fill out the application form carefully with personal information and property details.
Step 5: Select the desired loan amount.
Step 6: Enter the financial status and income details in order to access the loan offer.
Step 7: Double-check the application form and other details before submission
Step 8: Click on ‘Submit’
Upon completing all these steps, the application for a property loan will be submitted successfully.
What are the benefits of a mortgage loan?
Being a secured credit option, there are several advantages of the mortgage loan. Mentioned below are the key advantages of the mortgage loan or loan against property:
Ample loan amount
While speaking about mortgage loans, a substantial amount of funds is offered against the asset value of the borrowing person. Here, borrowers can get up to 80% of the property value which is pledged as collateral. However, the terms and conditions of LAP vary as per the lender, applicant’s profile, etc.
Another benefit of LAP is its flexible tenor. With a flexible tenor, borrowers can easily make the loan repayment without hassle. In most cases, a loan against property features a flexible repayment tenor as predetermined by the applicant. Generally, the loan tenor can be extended up to 20 years or even 30 years so that the mortgagors can repay the borrowed sum in EMIs.
Reasonable interest rates
Being a secured loan, property loan interest rates are relatively lower than unsecured credits like personal loans, business loans, etc. Although varying from one lender to another, the interest rate for LAP ranges between 8% and 10% per annum and often go up to 20% per annum. With low-interest rates, borrowers can enjoy maximum benefits on loan against property that reduces the burden of higher EMIs every month.
Applying for a loan against property has become one of the best funding options owing to its fast approval. Once the borrowers collateralise their properties to the lender, the latter conducts some verification and disburses the credit amount in the bank account of the borrower within a couple of days.
No end-use restriction
Another noteworthy benefit of loan against property is that it features no-end-use restrictions. In other words, the borrower can use the credit amount to meet marriage expenses, medical emergencies, educational charges, and so on.
Borrowers should keep in mind that pre-approved offers on mortgage loans are only offered to existing and reliable customers. However, for the applicants who are availing this credit option for the first time, it is mandatory to meet the mortgage loan eligibility criteria in the first place or else their application request may be rejected by the lender.