Loan Against Property
It is normally taken by borrower against his existing residential/ commercial immovable property. This loan is considered as Secured loan. Here Financial Institution provides loan payment in favor of property owner.
LAP is normally given against below mentioned property :
• Existing Residential Property
• Existing Commercial Property
• Existing Residential/ Commercial Plot
• Regular rental Income received
Purpose of LAP :
Self Employed(SEP/SENP) Persons:
• For Business Purposes.
• As an overdraft facility.
• Higher Education of their family members
• Marriage in the Family
• To close existing higher Interest loan
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Salaried Person:
• Higher Education of their family members
• Marriage in the Family
• To close existing higher Interest loan
In some cases LAP can be taken in the name of the firm/company also with the owner or directors to join as co-borrower in the loan.
Eligibility Calculation Parameter for LAP :
Borrower must be an Indian citizen. Bank does not lend Loan Against Property(LAP) and Commercial Loan to NRI.
• Borrower should not be less than 21 Yr. at the time of submitting the loan application
• Must be working if salaried or Must be involved in business if SEP/SENP
• Should have the minimum required salary or monthly repaying capacity.
• Self Employed & Salaried persons are eligible to take this loan.
• Property should be dully registered and there shouldn’t be any encumbrance or mortgage or litigation on the property.
• More than one applicant can be part of the loan (could be a blood relative or spouse)
Formula used by Bank/ Financial Institution to calculate loan eligibility are as below :
A) Home Loan Eligibility for Salaried customers:-
{(NTH – Obligation) * 60%} / EMI per Lac
Eg. – If customer Gross Income is Rs. 110000 per month and Net Take Home(NTH) salary is Rs. 100000/month and he has not taken any loan earlier So he will be eligible for
Rs. 100000 – 0 =100000
100000*60% =Rs. 60000
If EMI per Lakh for 20 Years will be 1000 then
Rs. 60000/1000= 60
Thus customer will eligible for 60 Lakh Loan Against Property(LAP)
B) Home Loan for Self Employed Customers:-
{(NTH – Obligation) * 65%} / EMI per Lac
Eg. If customer Net Take Home Income is Rs. 100000 per month and he is paying Rs. 20000 as Car loan EMI So he will be eligible for
Rs. 100000-20000= 80000
80000*65% =Rs. 52,000,
If EMI per Lakh for 20 Years will be 1000 then
Rs. 52,000/1000= 52
Thus customer will eligible for 52 Lakh Loan Against Property(LAP)
Thumb rule to calculate loan eligibility by Financial Institution :
A) Loan to Value (LTV) – Bank consider 50%-65% Market Value of Property for Loan eligibility.
B) Fix Obligation Income Ration (FOIR) – Bank Consider Max. 60% of net income for loan eligibility rest other income considered to fulfil house hold expenses.
Value of the property or your income (whichever is lower) that loan amount will be given to borrower. Other Eligibility Criteria Revolves Around the Maximum Age of the person applying for Loan. 60 Years age is considered as Max. Age for salaried & 65 Years age considered for business man.
Processing Time: Processing Time to sanction LAP is approx. 10-15 days. And approx. 5-7 days for disbursement. The tenure granted is for maximum 15 years and up to the age of 65 years.
ROI for LAP : ROI of LAP is little higher comparison to Home Loan. Current Rate of LAP varies from 10.5% to 15% according to customer profile and risk involved. The interest rate can be fixed or floating. The ROI can be fixed for the initial year of the tenure.
DOCUMENTS REQUIRED :
| S.No. | For salaried Customer | For Self Employed Professional (Doctor, CA, Architect) | For Self Employed Non Professional (Manufacturer, Trader, Service Provider) |
|---|---|---|---|
| 1 | KYC Documents (Proof of identity, DOB, Signature Proof and Residence Proof) | KYC Documents (Proof of identity, DOB, Signature Proof and Residence Proof) | KYC Documents (Proof of identity, DOB, Signature Proof and Residence Proof) |
| 2 | -NA- | KYC Documents of Firm/Company (Pan Card and Address Proof, GST No.) | KYC Documents of Firm/Company (Pan Card and Address Proof, GST No.) |
| 3 | -NA- | Educational qualification certificates, degrees, diplomas, and other academic credentials | -NA- |
| 4 | Latest 3 Months salary slips | Last 3 Years ITR Copy, Computation of income (Self & Company or Firm). | Last 3 Years ITR Copy, Computation of income (Self & Company or Firm). |
| 5 | Last 3 Years Form-16 / Last 3 Years ITR Copy | 3 Yrs. Profit and Loss A/c and Balance Sheet Copy. | 3 Yrs. Profit and Loss A/c and Balance Sheet Copy. |
| 6 | 12 Months salary account statements reflecting salary credit. | 12 Months Saving A/c statements & 12 Months Current A/c statements | 12 Months Saving A/c statements & 12 Months Current A/c statements |
| 7 | Property Documents- (Chain of Registry paper & Sanction Map of property) | Property Documents- (Chain of Registry paper & Sanction Map of property) | Property Documents- (Chain of Registry paper & Sanction Map of property) |
| 8 | Processing Fees Cheque. | Processing Fees Cheque. | Processing Fees Cheque. |
Team FinancialDistributor will be glad to offer you expert advice and guidance in order to help you choose the right bank/financial institution to get the cheapest rate of interest with maximum tenure along with maximum savings.
Basic Eligibility Criteria
Good Credit Score
Above 21 years of Age
Salaried professional
Resident of India
Valid Bank Account
PAN Card and Voter ID Card/Driving License
Bank Statements for the last three months
Salary Slip for last three months