A loan against property is a type of secured loan that individuals can avail from any financial institution. To borrow using this instrument, they need to provide their property as collateral. Willing borrowers should be aware of the documents required for property loans and stay prepared with those before applying for credit so that they can avoid the hassle.
Documents required for loan against property
Individuals need to keep the following documents handy for a hassle-free application process:
- Proof of identity
Any one of the following documents can be submitted as identity proof:
- Aadhaar card
- PAN card
- Voter ID card
- Passport
- RTO-issued driving licence
- Proof of residence
Individuals can submit any of the following documents as proof of residence:
- PAN card
- Aadhaar card
- Driving licence
- Voter ID card
- Proof of age
Any of the following age-related documents are required for the loan against property:
- Aadhaar card
- Driving licence
- Voter ID card
- PAN card
- Property-related documents
Following are some of the property-related documents individuals need to submit:
- Buyer’s agreement
- Property tax receipts
- Title deed
- Any other document related to the mortgaged property
- Proof of income
One of the following documents can be submitted as income proof:
For salaried individuals:
- Last three months’ bank account statements
- Income Tax Returns
- Last three months’ salary slips
- Form 60
For self-employed individuals:
- Last nine months’ bank statements
- Income Tax Returns
- Profit and Loss statement
- Balance Sheet
Note: Documents required for the loan against property may not be the same for all financial institutions.
Eligibility criteria for loan against property
The following are the eligibility criteria for individuals who want to apply for a loan against property online:
For salaried individuals:
- Individuals must be Indian citizens.
- Their age must be between 28 to 58 years.
- They must have three years of work experience in a public, private or multinational company.
For self-employed individuals:
- Individuals must be Indian citizens.
- Their age must be between 25 to 70 years.
- Individuals’ current businesses should have completed a minimum of five years of operation in the market.
Note: The eligibility criteria are subjective and can be different from one lender to another.
Factors affecting the eligibility criteria of a loan against property
An individual’s property loan eligibility gets determined by the following factors:
- Borrower’s age
Age is one of the important factors that impact the eligibility criteria for a loan against property. For instance, if individuals are in their early 30s or 40s, they can easily apply for this loan. It is because they can easily clear off the due amount as they get a long tenor. However, if individuals are in their late 40s or 50s, they have a disadvantage as they get less time to clear off the dues.
- Applicant’s profile
Applicants’ profile plays a significant role in the loan amount that the lender will sanction. Individuals can be self-employed or salaried to apply for a loan against property. As salaried individuals have a regular income every month, they can easily get this loan. Whatsoever, if self-employed individuals file their ITR regularly, they can easily avail loans against property.
- Credit score
The credit score is one of the most important factors that not only determine the loan against property interest rates but also its eligibility. Having a good credit score of more than 750 is important as it indicates an individual’s financial integrity. They pay their EMIs on time.
If individuals do not maintain a good credit score, it will be difficult for them to get a low-interest rate on loans against property. In addition, maintaining a good credit score helps them negotiate with financial institutions so that they can secure an attractive interest rate.
- Loan tenor
Opting for a long tenor will help individuals avail a higher loan amount. As the monthly instalments are spread over a longer period, the EMI amount becomes less. For instance, if individuals have a low income, they can choose the longer tenor which will be beneficial for them as they have to pay a low instalment amount each month. Nevertheless, individuals should ideally use the LAP EMI calculator to calculate the monthly instalments before taking the loan. It can help them understand which tenor will be the best for them.
- Insufficient property documents
Individuals need to submit all the property-related documents as asked by their lending institution. It includes title deeds, written approvals from concerned authorities, etc. The lending organisation must ensure that the property is not associated with financial or legal obligations. They must also ensure that it is approved by the local authorities before disbursement of the loan amount.
- Regularity of Income Tax Returns (ITR)
If borrowers are self-employed, they need to submit the last three years’ ITR to the lending institution. However, if individuals do not have ITRs, even though their income is sufficient, they can get a lower loan amount.
Furthermore, certain reputed financial organisations provide pre-approved offers on their products like home loans or loans against property to their existing customers. These offers speed up the property loan application process. Customers can visit the website of these institutions and fill in their basic details like name and contact number to check their pre-approved offers.
Overall, individuals must be ready with all the documents required for property loans as it simplifies the last-minute hassle during the loan application process. Thus, they can ensure quicker approval of their loan.