A loan against property offers substantial funds to a borrower that helps to meet big-ticket financial requirements such as hospitalisation expenses, home renovation, higher education, weddings, etc.
It is imperative to note that a LAP is a long-term financial commitment. Hence, prospective applicants must be aware of certain factors related to a LAP to make an informed decision and secure the credit smoothly.
Things to keep in mind for securing a LAP smoothly
Illustrated below are certain factors that one should keep in mind to secure a loan against property smoothly:
- Carefully choosing LAP repayment tenor
Owing to its secured nature, a longer tenor is available for LAP borrowers to repay the credit amount. Thus, the monthly instalments are spread across several years, and the interest rate is lower. In addition, a long tenor implies a lesser EMI amount, which further indicates a reduced monthly repayment burden.
Individuals can opt for an extended tenor if they want to pay their EMIs affordably. Besides this, one must also find out about prepayment terms and charges. This is applicable in case one receives a substantial sum and is willing to pay off a loan sooner.
Applicants can use a LAP EMI calculator to estimate the monthly instalment outflow beforehand. They can simply vary the loan tenor and principal amount on this tool to get this vital information instantly.
- Opting for the best property loan interest rate
Borrowers must compare multiple lending institutions before finally settling for one offering the best LAP interest rate. However, that should not be their only criteria.
Besides the mortgage loan interest rate, individuals must go through other loan terms. Opting for a reputed lender also comes with several other benefits.
For instance, renowned financial institutions extend pre-approved offers that help in simplifying a lending process, thereby making it hassle-free. These offers are provided on multiple secured and unsecured financial products. Applicants can check their pre-approved offers by providing details like their names and contact numbers.
- Acquiring a loan amount that is actually required
The finally approved loan amount depends on a lender’s assessment of the pledged property, borrower’s requirement, income or repayment capacity. One should compare the LTV ratios of various lenders to choose the one that provides maximum funds on the collateral.
Customers should ensure not to apply for an amount that is more than what is actually required, as this would add to one’s financial burden. Also, borrowers must try making a substantial down payment to reduce the loan burden further.
- Checking loan agreements closely
Applicants willing to opt for a loan against property for education or for other purposes must carefully go through their loan agreements. One must ensure that there are no penalties, hidden costs, or other adverse clauses that can cause problems in future.
- Disbursal time
The disbursal time is the time taken for a loan against property to get processed. This varies from one lender to another. Prospective applicants must ensure that the disbursal time suits their timeline of meeting expenses.
- Ensuring that a property is in good shape
A property that is properly kept and has clear ownership is more likely to fetch a loan rather than one that is dilapidated, is in the middle of a legal dispute or requires repairs. So, applicants must ensure that all papers are in place and the property is in a decent condition. This would lead to quick loan processing and sanction.
- List of documents required to acquire a LAP
Besides, applicants must take note of the list of documents needed to apply for a loan against property. Given below is a list of all the documents required:
- Latest salary slip
- Bank account statements
- Income tax returns
- PAN card, Driving Licence, Voter ID, utility bills, Passport, Aadhaar card, or any other government-approved address and/or photo identity proof
- Documents of the property that is to be mortgaged
Therefore, individuals looking to acquire a loan against property must keep in mind the points mentioned above to get their credit in a hassle-free manner.