Loan Against Property Interest Rates

Loan against Property , which is also commonly referred to as mortgage loan is a type of secured loan wherein the borrower must pledge an asset as collateral to the lender against the amount borrowed. The interest rate for loan against property varies from lender to lender, but it generally ranges between 9.80% to 14.50%, and the repayment period is between 3 – 15 years.

If you are a first-time loan applicant, knowing the following things will make the borrowing process easy.

Know your eligibility

Before you initiate your LAP application process, it would help if you know the lender-specific eligibility requirements. Generally, you can find this information on the lender’s website. By understanding the eligibility, you can make an informed borrowing decision.

Compute the EMI

As part of your financial planning for a loan, you must calculate the EMI payable, and how much amount you must set aside every month. You can use the LAP EMI calculator to determine the exact amount you must repay throughout the loan tenure.

Keep the property-related documents ready

When you apply for a loan against property, the lender would require you to furbish property-related documents like sales deed, house tax certificate, approved building plan, registration certificate, etc. Make sure that you keep the documents ready beforehand to avoid delay in the approval process.

Compare and choose the right lender

It is paramount that you compare the lenders in terms of interest rate, loan-related charges, flexibility in repayment, loan tenure, and choose the right lender with the best offer to suit your needs. Process Involved in Applying for LAP online

• Visit the lender’s website, fill the loan application form with necessary information
• Based on the information you provide the lender will determine your eligibility and the maximum amount you can avail
• You must submit required property-related documents, and the lender will begin the verification process of the papers as well as the property that you pledge
• If the lender is satisfied with the verification, they will issue a sanction letter
• If you agree with the loan terms, you can accept the sanction letter, and submit the original documents
• The lender will disburse the approved amount

Please note – The loan process may differ from lender to lender. Tips to Reduce LAP Interest Rate When applying for a loan against property, you would want to get the loan at an affordable interest rate. The following tips can help you reduce the interest rate.

• Find about the interest rate applicable for different loan slab. For instance, the lender may have a lower interest rate for a loan of Rs. 30 lakhs than a loan of Rs. 20 lakhs.
• An effective way to reduce loan against property interest rate is to adjust your loan tenure as it has a direct impact on the interest rate. Generally, loans with shorter tenure have a lower interest rate.
• Avoid applying with multiple lenders as every rejection will affect your CIBIL score, and lower CIBIL score would mean higher interest charged by the lender.

Documents Required for Loan Against Property

To be eligible for a loan against property, you must comply with the lender’s documentation requirements. Generally, the lenders ask for the following documents:

• Proof of identity and residence (Passport, Aadhaar Card, Voter ID, Driving Licence, etc.)
• Form 16
• IT returns certificate
• Bank account statement (reflecting your salary credit)
• Salary slips (last three months)
• Property-related documents – Sales deed, building construction plan approved by the civic authorities, property tax receipt, registration certificate

Now that you are aware of the different aspects of loan against property and how to reduce the interest rate, make sure that you do your research well about the lender and make an informed borrowing decision.

What are the Factors That Affect Loan Against Property Interest Rate

• Credit Score : Your credit score has a huge impact on loan against property interest rate. The higher the score, the lower the interest can be.
• Loan Tenure: The interest rate can be affected by the loan tenure. The interest rate can decrease as the loan tenure increases. The rate will get higher, the shorter the loan tenure is.
• Personal Details : Your age, income, occupation, etc. also have an impact on the interest rate.
• Property Type : One of the most important factors that is considered while calculating the interest rate is the market value of the property type.

Documents required to apply for the Loan Against Property

Based on your details, you will be asked to provide different documents to avail a loan against property. Here are some of them-

• Identity Proof- PAN card, Passport, etc.
• Address Proof- Aadhaar card, passport, etc.
• Property Documents- NOC from society, copy of original sale deed, allotment-possession letter.
• Income Proof- Sales tax certificate, audited financial sheet, latest income tax return, salary slips, etc.

Features and Benefits of Loan Against Property

• Lower Interest Rate : As a loan against property is a secured loan, the interest rate is generally low.
• Flexibility in Loan Repayment : The loan tenure can be flexible. You can opt for a tenure based on your financial requirements.
• No Change in Ownership of Property : When you avail a loan against property, the ownership of the property will not change. The property will be owned by you.