ELIGIBILITY CRITERIA FOR LOAN AGAINST PROPERTY
|FACTOR||For Salaried||For Self Employed|
|Age||21 years- 60 years||Between 23 years- 65 years|
|Work Profile||In govt. sector, public sector or private company.||Self Employed with steady income/ self-employed professionals(doctors, engineers, dentist, architects, chartered accountants and the likes).|
|Assets||Must own a commercial or residential property||Must own a commercial or residential property|
|FACTOR||SALARIED||SELF EMPLOYED/BUSINESS/SELF EMPLOYED PROFESSIONALS|
|Age Proof:||Pan Card/Passport/Birth certificate||Pan Card/Passport/Birth Certificate.|
|Identity Proof:||Pan Card/Voter ID card/Adhaar Card/Valid Passport/Driving License/Employer’s ID card (for salaried) or any other government ID.||Pan Card/Voter ID card/Aadhaar Card/Valid Passport/Driving License or any other government ID.|
|Address Proof:||Ration Card/Telephone bill/ Electricity Bill/Rental agreement/Passport Copy/Bank Passbook or statement/Driving License.||Ration Card/Telephone bill/ Electricity Bill/Rental agreement/Passport Copy/Bank Passbook or statement/Driving License.|
|Income Proof:||Last 3-6 months salary slips. Last 3-6 months bank statements of salary account. Form 16 of last 1-2 years.||Last 3 years Income tax return. Bank statements for the last 6 months. Business continuity proof|
|Property related documents||Copy of the Allotment letter/Buyer agreement/Sale deed. Title deeds with all the previous chains of property documents/agreements. Occupancy certificate or CC and approved plan. Latest property tax receipt/Utility bill. Proof of no encumbrances on the property.||Copy of the Allotment letter/Buyer agreement/Sale deed. Title deeds with all the previous chains of property documents/agreements. Occupancy certificate or CC and approved plan. Latest property tax receipt/Utility bill. Proof of no encumbrances on the property.|
DO’S AND DON’TS WHILE TAKING A LOAN AGAINST PROPERTY
As loans against property is a secured loan, most lenders usually do not hesitate much to provide funds against your property. But since you keep your most valuable asset with the lender it is important that you know certain dos and don’ts regarding this loan before you pledge your asset.
- Do evaluate the market value of your property: The first and foremost step is to know the market value of your property. Some borrowers may try to show a higher value of their property whereas some may not even know their property’s current value. When your loan application will be in process the lender will evaluate the market value of your property. The quantum of amount to be sanctioned will eventually depend upon the lender’s evaluation of your property’s value. Lenders determine your assets value on the prevailing fair market value and not the past or future potential value.
- Do a little research on the interest rates: Before you go to any lender why not do a little research and find out the interest rates and loan tenure offered by the lenders in the market. Interest rates play a great role in determining the EMI which you will be paying for a tenure fixed by the lender.
At mantra, we will help you choose the best interest rates for a tenure that will make your EMI affordable and pocket friendly.
- Do Check your Credit Score: Before applying for a loan against property do check your credit score. Most people think that as LAP comes under secured loan, CIBIL score will not be of such importance. But your CIBIL score is an important determiner of whether you will get a loan, how much will be your sanctioned amount and at what interest rates will you be able to avail it. So, keep your track record good to increase the chances of loan approval.
Now let us take a look at some of the Don’ts which you should keep in mind while going for a loan against property loan:
- Don’t choose a longer loan tenure: You should go for a repayment tenure only after evaluating your repayment capacity. While longer tenures make EMIs smaller, in the long run you would end up paying more interest.
- Don’t take more than you can repay: Since loan against property seems to be lucrative as banks offer large amount, remember repaying the loan is as important as getting the loan. Before you go ahead, calculate the amount you actually want and how much interest would be accrued on it. Then, calculate the EMI you would have to pay every month. What may initially look like a help may prove a disaster in the coming years if the EMI exceeds your repaying capacity.
- Don’t delay on EMI Payment: While not paying EMIs in the initial years will lead to penalty, continuance of irregular payment of EMIs will lead to severe consequences. Interest rates will start piling up, credit score rating will get reduced, finally it will lead to stringent action by the lenders that is seizure of property mortgaged.
- Don’t forget to read the terms and conditions of the Lender: Before you finalize a deal don’t forget to read the terms and conditions of the lender. Since loan documents are lengthy, most borrowers tend to skip the terms and conditions which is not good. Some lenders may have restrictions on how you use the loan amount. Therefore, you should be clear with their terms and conditions. Also reading a loan document carefully will help you to know the log in fees, processing fees, pre-payment charges, penalties, EMIs, etc.
- Don’t forget to claim Tax benefits: Just like a home loan you can avail tax benefit in a loan against property as well. If the sanctioned amount received under loan against property is used for business purpose then you can claim exemption on the interest paid and other charges such as processing fees and documentation charges as business expenditure under section 37(1) of the Income Tax Act. If you are salaried you can claim tax benefit under section 24 (b) of the Income Tax Act on the interest paid if the loan amount sanctioned is used to purchase another property.