When applying for a Loan Against Property (LAP), you must offer an asset as collateral to secure the credit. The borrowed funds can be utilised for professional purposes such as funding education, weddings, business expansion or purchasing a home or vehicle. As LAPs are secured loans, they carry risk for the lender, resulting in interest rates for the borrower. However, the eligibility criteria and document requirements may vary among lenders.
To simplify the process, we have outlined the eligibility conditions and documentation needed to facilitate your LAP application.
Eligibility Criteria to Apply for a Loan Against Property
Ensure fulfilling these eligibility conditions to apply:
- Citizenship: These loans are accessible to Indian citizens only.
- Age: The applicant should be at least 25 at the time of application and a maximum of 75 years at the end of the loan term.
- Occupation Status: These loans are available for applicants running their business profitably. Salaried employees are not eligible for a LAP with lenders like Hero FinCorp.
- Business Status: The applicant’s business should be active for at least three years.
- Loan Amount: At Hero FinCorp, an applicant can apply for a loan of up to Rs 7.5 Crore, not exceeding 75% of their property’s current market price.
- Maximum Tenure: Applicants can select a flexible repayment term of up to 15 years. However, they can not extend the repayment period after reaching 60.
Documentation Requirements for a Loan Against Property
Documentation is an important requirement of a LAP application process. Some of the documents required for the application include the following:
- Mandatory Documents: Duly filled application form and PAN card
- Identity Proof: Aadhaar card, driving licence, ID card, or a valid identity card issued by the Indian government
- Address Proof: Passport, driving license, voter ID card, registry copy, GST certificate, property tax receipt, lease or rent agreement
- Proof of Business Existence: Partnership deed copy, certificate of practice, trace license, GST certificate, UDHYAM Certificate
- Signature Proof: Passport, PAN card, banker’s verification
- Income Proof: Last three years’ ITRs, last six months’ bank account statement, income statement, balance sheet, profit and loss statement
- Property Related Documents: Complete set of records about the property being offered as collateral
Factors Affecting Your LAP Eligibility
Several key factors influence your eligibility for a Loan Against Property;
- Professional Standing: Any self-employed professional or business owner can apply for LAP. Lenders will assess your status, gauge your income and expenses, and determine your ability to repay the loan.
- Consistent ITR Filing: Financial institutions typically request years’ worth of Income Tax Returns. This documentation indicates a cash flow over a period and provides insight into your financial situation for timely repayment.
- Credit History: Lenders review your credit history during the application process to evaluate your conduct and determine your creditworthiness. A person’s credit score provides lenders insight into how they manage debts and repayments. A good credit score increases the likelihood of loan approval, whereas a low score may result in rejection.
- Age: Lenders assess your age when reviewing loan applications to gauge your remaining working years. Individuals who are retired or nearing retirement might face challenges in securing loan approval.
- Loan Repayment Period: Opt for a repayment term with instalments when taking out a Loan Against Property (LAP). Utilise an EMI calculator to estimate EMIs based on the loan amount, LAP interest rate and repayment period. Longer terms lead to EMIs, while shorter terms result in EMI amounts. Select a repayment period that aligns with your budget and ability to repay.
- Property Documentation: When applying for a Loan Against Property, lenders meticulously examine the documentation related to your property. Therefore, ensure all necessary documents are provided as proof of ownership without any financial issues associated with the property.
- Property Insurance: Including property insurance as part of your LAP application offers security. It bolsters your credibility by safeguarding the collateral from becoming a performing asset.
Tips to Boost Your Chances of Approval
Here are a few tips to boost your chances of LAP approval:
- Add a Co-Applicant: If your income or credit score is low or you are nearing retirement, you may improve your LAP eligibility by adding a co-applicant.
- Improve Your Credit Score: The credit score is crucial for your LAP eligibility. Be consistent with your repayments, diversify your credit portfolio, reduce your DTI ratio, and take other necessary steps to improve your credit score before applying.
- Opt for a Longer Tenure: A longer tenure reduces the EMI amount, making repayment easier to manage. As a result, the lender feels safer sanctioning the loan.
- Supplement Your Income: Lenders prefer borrowers with sufficient income to ensure timely repayment. You may start a side business or find other income sources to improve your eligibility and boost your chances of approval.
- File Your ITR on Time: Lenders request the last three years’ Income Tax Returns to determine your financial status and repayment capacity. Therefore, file them on time each year to verify cash flow, boosting your chances of approval.
Steps to Apply for a Loan Against Property
Here are the steps to follow when applying for a Loan Against Property;
Step 1: Check your loan against property eligibility criteria based on age, business vintage, and FAQs.
Step 2: Gather essential documents like KYC, income proofs, and property papers.
Step 3: Utilise our convenient online LAP EMI calculator for tailored planning.
Step 4: Fill out the LAP application form with details like property location and loan amount.
Step 5: Reach out via our customer care helpline or visit your nearest branch.
Step 6: Enjoy hassle-free processing and doorstep document collection for swift approval.
Meeting the eligibility criteria and providing the required documents are crucial in determining your eligibility for an LAP. However, meeting the lender’s conditions can enhance your chances of approval and secure loan terms and rates. By opting for payments, you can focus on long-term savings and work towards achieving your financial objectives.
Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader’s discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
