A loan against property (LAP) is one of the most availed loan options in India. A salaried, as well as a self-employed person, can opt for a property loan easily by following some simple steps. The benefit is that you need not sell any property to avail the desired loan, and as you are placing your property as collateral, it helps reduce the risk for lenders. Since it is less risky for lenders, you would get the desired loan at lower interest rates.
So, to avail of a property loan, proper planning is required. You should check your ability to pay monthly EMI by knowing the amount by using a loan against the property EMI calculator. It will help you select the loan amount and tenure according to your ability to pay back so that your loan does not get rejected.
Here are a few steps that would help you go through the application process:
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The essential documents, like property documents and personal documents, are collected from the applicant. Moreover, a completed application form with signatures in the mandatory fields will be required. You can check your EMI through a loan against the property EMI calculator. Note that the signatures must be an exact match across the application form as well as all the documents. Your application can get rejected if there is even the slightest mismatch. One should be very cautious while signing the papers.
All your documents are carefully reviewed and scanned. The data that you have filled in the application form is approved after checking it thoroughly. The signatures are inspected carefully. Then the information is submitted to the NBFC authorities for further processing. The lenders will review the records again and then they will move on to the next stage. If your documents fail to clear this stage, then your loan against the property will be rejected.
📌 Credit Appraisal:
Your credit information report or your credit history, which contains records of your credit cards and previous loans will be validated by the credit officer at the NBFC where you have applied for your property loan. The NBFC will check your creditworthiness. That is how they determine that you will default on your debt obligations, or how capable you are of receiving a property loan. After clearing this stage, your application is sent for further processing.
📌 Legal Valuation:
After your application has cleared the credit appraisal, the next stage is the statutory valuation of the property you have pledged. All the essential property documents are checked carefully by the legal team of advocates and field experts. Every NBFC has a team of experts and advocates. The team visits the location to determine how old the property is and that there are no legal violations of the property like unapproved constructions or plans, and structure beyond the specified area. After the verification, you can avail of a loan not more than 70% of the valuation of the property.
📌 Approval / Rejection:
After completing both the stages, i.e. your credit appraisal as well as the legal valuation, the property loan will either be approved or rejected. The final decision is at the absolute discretion of the financial institution where you have applied for your property loan. There shouldn’t be any conflict in your loan getting approved as long as the on-field verification and document verification ended positively.
📌 Signing agreement:
An agreement on your loan against property will be sent to you, after prior approval of your application. You must read the contract carefully and understand everything that is written there. You must know the gist of the agreement before signing it. If you find any difficulty in recognizing a specific term written in there, then you should consult the NBFC.
Once the property loan is approved, and the agreement is carefully signed, the deal is signed. A few post-dated cheques are collected from the customer to ensure that the EMI gets paid in case the electronic clearing service (ECS) fails to work for some reason. You can use a property loan calculator to verify the amount. After completing all the stages, the property loan gets disbursed as a one-time payment to the applicant.
Getting a loan against property is a simple process. You need to keep the required documents ready and do a proper valuation for your property before applying for a property loan. You need to select a tenure that is friendly with your ability to pay monthly EMIs. So, you can use a loan against the property EMI calculator to get an approximate idea before applying for the loan. Once you get the loan, you can use it according to your requirements. Make sure to pay back monthly EMIs timely to avoid a reduction in credit score.