Loan Against Property

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Loan Against Property (LAP) or mortgage loan is a type of secured loan offered by banks and Housing Finance Companies (HFCs) against commercial or residential property owned by the borrower. The amount, which is availed by keeping the property as collateral till the loan is fully repaid, can be used by the borrower for various purposes like expanding a business, funding children’s education, meeting medical expenses, and more. The maximum loan amount provided under LAP can go up to 70% of the property value. Along with being cost-effective, loans against property are reasonably convenient to avail and repay due to the relatively low mortgage interest rate.

Get upto 100% of Property Value

*T&C Apply | Rate of Interest Linked with Repo Rate and subject to changes as per RBI circulars

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Know More about LOAN AGAINST PROPERTY

ELIGIBILITY CRITERIA

The following people are eligible to apply for a Loan Against Property:

~ Salaried / Self-Employed / Professional / NRI Individuals

DOCUMENTS REQUIRED (For Salaried Individuals)

The following documents are required to apply for a Loan Against Property:

~ Appointment Letter / Last Increment Letter.
~ Last 6 months Payslip
~ Last 3 years Form 16 & ITR
~ Bank Statement last 12 months (Salary and other Savings Ac) from 01.04.22 to till date
~ Pan Card & Aadhaar card of Applicant & Co-Applicant
~ Existing loan sanction letter and repayment schedule
~ Photo of applicant & co –applicant.
~ Property Papers: Sale Agreement/Allotment Letter Sanction Plan, Mutation & Update Tax, Porcha, Mother deed, Development Agreement, Money receipt., as applicable for the property.

DOCUMENTS REQUIRED (For Self-Employed Individuals / Proprietors )

The following documents are required to apply for a Loan Against Property:

~ FY23 Provisional financial
~ Last three year audited financials ( FY-22, & FY-21, & FY-20), along with ITR and Computation, Balance sheet, Profit & loss, Schedule, Tax Audit Report -Form 3cb, 3cd
~ Form 26 AS if any
~ Sanction Letter of all loans i.e. cash credit, term loans, car loans, Loan against property, Machinery loans along with Schedule.
~ Last 12 months bank statements of all banks.
~ Address proof (Telephone bill or electricity bill)-Latest (within 60 days)
~ Udyam registration certificate
~ Trade reference 5 Buyers and 5 Suppliers contact details along with the volumes for last two years and 2 personal references (Friends and relatives).
~ GST Certificate & GST Returns from April 22 till date.
~ Profile of the company (History, Product, and Operation).
~ Valuation & Legal Technical Cheque.
~ Group Company Financials and Sanction Letter.
~ Property Papers:
-Sale Deed Including Back Chain.
-Map of Sanction Plan.
-Property Tax Slips

Proprietor & Co-Applicant Documents:
~ ITR Return with computation for last 3 Years & Form 26 AS if any.
~ Loan Sanction Letter If any
~ Last 12 months Bank Statement savings account
~ KYC – PAN Card, Aadhar Card
~ Photographs of each individual

DOCUMENTS REQUIRED (For Partnership Firms)

The following documents are required to apply for a Loan Against Property:

~ FY23 Provisional financial
~ Last three year audited financials ( FY-22, & FY-21, & FY-20), along with ITR and Computation, Balance sheet, Profit & loss Schedule, Tax Audit Report -Form 3cb, 3cd
~ Form 26AS If any
~ Sanction Letter of all loans i.e. cash credit, term loans, car loans, Loan against property, Machinery loans along with Schedules
~ Last 12 months bank statements of all banks.
~ Business Incorporation date proof- PAN Card
~ Partnership deed.
~ Udyam registration certificate
~ Address proofs (Telephone bill or electricity bill)-Latest (within 60 days)
~ Trade References 5 Buyers and 5 Suppliers contact details along with the volumes for last two years and 2 personal references (Friends and relatives)
~ GST Certificate & GST Returns from April 22 to till date.
~ Profile of the company (History, Product, and Business)
~ Group Company financial and Sanction Letter.
~ Valuation & Legal Technical Cheque.
~ Property Papers – (Front and Back).
-Sale Deed Including
-Map of Sanction Plan.
-Property Tax Chillan.

Partner or Individual Documents
~ ITR with computation for the last 3 years & Form 26 AS (IF ANY).
~ Loan Sanction Letter If any.
~ Last 12 months Bank Statement savings account
~ KYC – PAN Card, Aadhar Card
~ Photographs of each individual

DOCUMENTS REQUIRED (For LLP / Private Limited / Limited Firms)

The following documents are required to apply for a Loan Against Property:

~ FY23 Provisional financial
~ Last three year audited financials ( FY-22, & FY-21, & FY-20), along with ITR and Computation, Independent auditor’s report, Balance sheet, Profit & loss, Schedule, Tax Audit Report -Form 3ca, 3cd
~ Form 26AS (If Any).
~ Sanction Letter of all loans i.e. cash credit, term loans, car loans, Loan against property, Machinery loans along with Schedules.
~ Last 12 months bank statements of all banks.
~ Business Incorporation date proof- PAN Card
~ MOA (Memorandum of association) and AOA (Articles of Association) + Certificate of Incorporation.
~ Udyam registration certificate
~ Address proof Telephone bill or electricity bill. (Latest within 60 days.)
~ CA certified Latest share holding pattern and List of Directors on Company Letterhead
~ CA certified Net worth statement of Directors and Shareholders.
~ Trade reference 2 Buyers and 2 Suppliers contact details along with the volumes for last two years and 2 personal references (Friends and relatives).
~ GST Certificate & GST Returns from April 22 to till date.
~ Profile of Company (History, Product, Business).
~ Sample agreement copies of leading customers.
~ Valuation & Legal Cheque.
~ Group Company Financials and Sanction Letter.
~ Property Papers – (Front and Back Xerox).
-Sale Deed Including the last 13 years of Back Chain.
-Map of Sanction Plan.
-Property Tax Slips

Directors and Shareholders Documents
~ ITR Return with computation for last 3 Year & Form 26AS
~ Loan Sanction Letter, If any
~ Last 12 months Bank Statement savings account
~ KYC – PAN Card, Aadhar Card.
~ Photographs of each individual

Rack Rate of Interest (ROI)

~ Salaried- 9.50% to 20% per annum

Processing Fee / Loan Processing Charges

0.5% to 2% one time on the sanctioned loan amount.

The processing fee depends on the credit decision of Financial Institution providing the sanction. At no given point does BazaarMoney / its employees / partners solicit Processing Fee to be paid to our own account. This fee is directly payable to the Financial institution.

Premature Closure Charges

The Premature Closure Charges depends on the credit decision of Financial Institution providing the sanction. At no given point does BazaarMoney / its employees / partners solicit Premature Closure Charges to be paid to our own account. This fee is directly payable to the Financial institution.

Frequently Asked Questions about LOAN AGAINST PROPERTY

Features of Loan Against Property

The availability of higher loan amounts and the flexibility to use the amount for various purposes make LAP a better option compared to a personal loan. Mentioned below are some of the features and benefits of availing a Loan Against Property.

~ The loan is available against self-occupied residential property, such as house, apartment, flat, etc.
~ It is also provided against rented residential properties.
~ It is available by mortgaging commercial properties like an office building, malls, shopping complex, shops, etc.
~ It can be taken against a plot of land owned by the borrower.
~ Available for both salaried and self-employed individuals.
~ It comes with flexible tenure and lower interest rate compared to personal loans.
~ Interest paid for the Loan Against Property provides tax benefits under Section 37 (1) of the Income Tax Act, 1961.
~ If the amount is used for funding a house, the interest paid on the loan provides tax benefits under Section 24 of the Income Tax Act, 1961, up to an amount of Rs. 2 lakh

Charges associated with Loan Against Property

Besides the interest amount, there are several other fees and charges that your lender might levy from the time of applying for the loan till you repay it entirely. Here are some of the charges:

~ Application Fee is charged by lenders to cover all the preliminary expenses that they bear for conducting verification.

~ Processing Fee covers the cost of credit appraisal and depends on the borrowers’ credit profile, income and the loan scheme.

~ Administrative Fee is charged by those lenders who split the processing fee into two parts. The part charged after the loan sanction is known as the administration fee.

~ Foreclosure/Prepayment Charges are levied when a borrower prepays the loan either fully or partially before the end of loan tenure. Earlier, lenders used to charge prepayment penalties and foreclosure charges on loan against property.

~ Repayment Mode Related Charges are levied when borrowers request their lenders to change their existing repayment mode during the loan tenure. The fee usually goes up to Rs. 500 per instance (swap) and varies from one lender to another.

~ Rate conversion/switching fees are charged when borrowers request their lenders to switch or reduce their existing interest rates due to various reasons. The fee varies from one lender to another and usually goes up to 2% of the outstanding principal amount.

~ CERSAI Charges (Central Registry of Securitisation Asset Reconstruction and Security Interest) is the central online security interest registry of India. Potential lenders visit CERSAI website to check whether the pledged property is not claimed by some other lender. For this process, the lenders pay a nominal fee, which they later collect from borrowers.

~ Overdue Charges on EMI are levied when a borrower misses or delays timely payment of loan EMIs. It attracts penal interest rates on the outstanding dues or overdue instalment over the prevailing loan interest rates. Therefore, borrowers must pay loan EMIs on time.

~ EMI Bounce Charges are levied when you fail to make timely loan payment due to insufficient funds in your bank account. Lenders usually levy Rs. 500 on such defaults which may vary from one lender to another.

~ Legal Fee is usually included in the processing fee but some lenders charge it separately when they engage firms to scrutinise borrowers’ legal documents.

~ Franking Fee, commonly referred to as stamp duty fee, is a tax levied by the state government on any form of monetary transaction involving the transfer of rights of a property. The amount varies from one state to another, and depends on state laws, type of property, etc.To get more details on costs associated with home loan, click here.

Loan Against Property Balance Transfer

Loan Against Property balance transfer is a facility that allows borrowers to transfer their outstanding loan to a new lender for lower interest rate or better loan terms. Almost all lenders offer the loan transfer facility to their customers. Paying your loan EMIs regularly is one of the factors that help you enjoy loan transfer facility. But before going for loan balance transfer, carry out a cost-benefit analysis. Calculate the difference between the interest rates offered by the two lenders, the amount of the loan left unpaid and the remaining tenure. Also, do not forget to consider processing fee charges, which the new lender would be charging for balance transfer.

Repayment & Foreclosure of Home Loan

Home loan prepayment is when a borrower prepays his/her home loan partly before the end of the loan tenure. Loan prepayment helps in reducing the loan principal amount, which subsequently reduces the EMI amount. If the borrower has no issues with continuing with the on-going EMI amount, he/she can request his/her lender to reduce the loan tenure instead of reducing the loan EMI.

Home loan foreclosure, on the other hand, is when a borrower fully repays the home loan in a single payment instead of paying in instalments before the end of loan tenure.

Earlier, lenders used to charge prepayment penalties and foreclosure charges on floating rate home loans. But now RBI has mandated all lenders to not levy loan foreclosure and prepayment charges on floating rate housing loans when individuals pre-close the loan. However, on fixed rate home loans, some lenders still levy these charges.

How to choose a Loan Against Property offer

~ Rate of Interest: Some loan against property providers charge fixed and some floating rate of interest on loan against property. Fixed interest rates are considered ideal for loans with shorter tenure, while floating is suitable for loans with longer tenure. Some lenders even offer hybrid home loans in which the borrower can enjoy the benefit of both fixed and floating interest rates.

~ Loan Disbursal Time: The time for loan against property disbursal varies from one bank to another. It usually takes around 10-15 days for loan processing and disbursal. Choose a loan against property provider which takes less time and does not cause unnecessary delays in loan processing.

~ Loan Eligibility: loan against property eligibility criteria vary from one lender to another. The usual loan against property eligibility of an individual is determined by the borrower’s age, income, work profile and stability, credit history, etc. Always use a loan against property eligibility calculator to be sure whether you are eligible for the loan or not.

~ Hidden Charges: Loan providers levy a number of additional charges, such as the processing fee, prepayment or foreclosure charge, etc. It is best to read the fine print before making the final choice so that you do not end up feeling pick-pocketed when such charges are levied.

~ Terms and Conditions: List of terms and conditions pertaining to repayment, prepayment, loan transfer, and many other things related to the loan should also be taken into account while choosing a loan against property.