Questions Answered About Loan against Property (Best of 10)
Purchasing a home brings a sense of emotional and financial security to an individual. Along with experiencing the joy of living in your own house, it also helps in applying for a home mortgage loan to deal with financially difficult times.
However, you must know all the details regarding a loan against property (LAP) to make the most of your deal.
Scroll down to know the answers to the top questions about LAP.
Q1. What are the end-use conditions of a loan against property?
A home mortgage loan does not have any fixed end-use obligations and the funds can be used for any legitimate purpose such as starting a business, pursuing education expenses, dealing with medical bills, consolidating debts, etc.
Q2. What factors determine the interest rate charged in a home mortgage loan?
In the case of a LAP loan, the interest rate levied by the lender usually depends upon the credit score of the borrower and the property type to be used as collateral. However, the borrower must inquire with the lender to obtain the loan against property lowest interest rate.
Q3. What are the eligibility requirements to avail LAP?
The eligibility criteria to obtain a LAP include:
• Nature of employment – The borrower should be a salaried employee or a self-employed individual.
• Age of the borrower – For a salaried employee, the borrower’s age should not be more than 60 years at the time of loan maturity. For a self-employed individual, the age should not exceed 65 years.
Q4. What are the documents required for a LAP loan?
The basic pre-requisites for availing LAP loan are:
•Identity/ Age proof
•Address Proof
•Latest Salary-slips for 3 months/ Business Certificate & Profile
•Form 16 for last 2 years/ Last 3 years Income Tax returns
•Bank statements
•Photocopy of Title Documents of the Property, Approved Plan, etc.
Q5. How are EMIs calculated to repay the loan amount?
Equated Monthly Installments (EMI) comprising of principal amount and the accumulated interest is computed depending upon the various loan parameters such as the borrowed loan amount, charged interest rate, and the opted loan tenure.
Q6. Describe the process of LAP loan verification and approval.
Post submission of the eligibility and other essential documents, the lender will evaluate the repayment ability and creditworthiness of the borrower by verifying the proofs. Upon thorough assessment, the bank shall issue a loan sanction agreement and the loan amount shall be disbursed to your bank account.
Q7. What is an amortization schedule?
An amortization schedule is referred to as the table which represents the break-up of EMIs along with its impact on the principal amount and the interest repayment.
Q8. How much loan amount is sanctioned in a LAP loan?
While the bank usually offers a loan amount up to 60% of the market price of the property, the lender also takes into account income, age, qualification, and work experience to determine the loan eligibility of the borrower.
Q9. What type of properties can be used as collateral in a LAP?
The bank generally offers a LAP loan against an immovable residential or commercial property. The bank also provides mortgage loans against plots or special property such as educational institutes/ hotels/ schools/ hospitals.
Q10. What are the major advantages of obtaining a LAP loan?
A secured form of credit, the LAP loan is an easy, secure, and efficient way to acquire substantial funds at an affordable interest rate and flexible repayment tenure.
