A lot of people tend to confuse LAP or loan against property with home loan and use the terms interchangeably. However, home loan and LAP are completely different financial products and serve specific purposes. Let us know more about LAP
What is LAP?
Loan against property is a type of secured loan wherein you must provide a property as a collateral to the lender against the amount you borrow. You can mortgage a residential or a commercial property and get up to a maximum of 50% of the property’s value as loan.
While many lenders in India provide loans against property, you must be careful while availing such loans. You must remember the following points to get the most of it.
Know the eligibility
Just as any other loan type, you must meet the lender’s specific eligibility criteria to get your LAP application sanctioned. This will also help you avoid the risk of rejection, and you can easily save time and effort in applying for a loan with multiple lenders. While the requirements may vary from lender to lender, mostly the financial organisations have a few common criteria, which are:
- You must be aged between 21 to 65 years
- You must a resident of India
- You must have regular income source either through salary or business income
- You can consider adding a female family member as the co-applicant for the loan as the women get discount on the interest rate
- You can increase your eligibility by applying for a joint loan with any of the earning family member
Consider the charges involved
The interest rate plays a vital role in determining the EMI that you must repay the lender. So, when you compare the loan offers from different financial organisations make sure that you choose the one that has the lowestmortgage loan interest rate.
Apart from the interest rate, you must also consider other factors like flexible repayment terms, minimal prepayment fees, zero or low processing charges, etc. Make sure that you read the loan term carefully to know if there are any hidden charges involved as it would increase the overall loan cost.
Know the exact value of the property
When you apply for a loan against property, it is paramount that you know the exact value of the property that you want to pledge with the lender. The value of the property depends on a variety of factors like the type of property, location, size, age, amenities available, etc.
Knowing the property’s value will also help you precisely know if you can pledge it to get the desired amount you want. It is best to get the evaluation done before you start applying for a loan so that you can be informed while negotiating with the lender.
If you have a high-value commercial property in a popular locality, you can be sure to get faster loan approval.
Know about quality of services offered
While applying for a loan against property, it is advisable to do your research about the lender’s reputation and the quality of services offered. Generally, the reputed lenders are very transparent about their charges and services.
Applying for a loan against property is a great way to get funds for immediate use. So, now that you are aware of the different factors to consider, due your due diligence and have a stress-free borrowing experience.