Loan Against Property (LAP) is the loan that you avail by keeping your property as a mortgage with the bank. The loan can be availed against any residential/ commercial/ industrial property. You can avail of a loan against property to meet your unforeseen financial needs such as medical emergencies, marriage purposes, or child’s education. There are multiple banks and NBFCs in India that can provide you loan against property at better interest rates and terms & conditions. However, to get LAP without any hassle, you need to fulfill the eligibility criteria asked by your lender. In case you do not meet the required criteria, your loan application might get rejected. Hence, it’s essential to have a thorough knowledge of LAP eligibility:
Age of the borrower: The borrower’s age plays a crucial role in getting loan approval. If you have reached the retirement age or will attain that age in a couple of years, then there is less chance of getting loan approval. In such situations, you can opt for a loan with a shorter duration, but that would mean payment of higher EMIs and more interest as well. In general, the minimum age to apply for LAP is 18 years and repayments have to be made before the age of 70 years.
Regular flow of income: A regular and steady source is essential to get your loan application approval. It ensures that you will be able to make your EMI payments on time without any default. The minimum salary requirement is usually Rs. 25,000 per month and above.
Changing jobs frequently: Job stability plays an important loan if you are opting for a loan against property. If you’re in the habit of frequently switching your jobs, your loan application might be rejected by your financial institution.
Poor credit history: If you applying for a loan make sure to check your credit history first. Poor credit history will lead to the rejection of your loan application. Before accepting your loan application, lenders seek the repayment ability, and your credit history needs to support the fact. Any default in payments, late payments, cheque bounces, etc. can affect your credit report; hence before applying for LAP make sure to improve your credit history. Generally, a credit score of 650 and above is required to get the loan approval.
Insufficient property documents: The documents related to the property you are going to mortgage should be complete and in order. This includes title deeds, approvals from relevant authorities, building plans and other documents as required by your financial institution. The lender needs to ensure that the property is not illegal and is approved by the local authorities before lending you the amount.
Insurance of the property: Mortgage insurance is beneficial for the borrowers as well as the lenders. As in case of any unfortunate event, the insurance covers the loan repayment, reducing the burden of your family. Hence, it’s important to get Pa mortgage insurance to safeguard your financial interest.
Rejection of previous loan application: Before approving your loan application, banks check your previous loan applications that have been rejected. In case, you have a record of rejection, it will appear on your credit profile check, and your new loan application might get rejected as well. Thus, you need to apply for loans only when in need and avoid applying without any reason.
The Bottom Line: If you fulfill the criteria mentioned above when applying for a loan against property, the lender will happily give you a loan without any question asked. Plus, you might also get the loan at better offers and interest rates. So, before applying, make sure you meet all the requirements of the lender.