The loan against property process includes availing a loan amount against the market value of the property mortgaged. The high loan amount availed is split across a long tenor into multiple EMIs. In case an individual fails to repay the loan amount, financial institutions liquidate the asset to meet their outstanding dues.
- Do’s -
- Ensure you qualify for a loan by meeting the required eligibility criteria-
~ A salaried individual in age range 33-58 years.
~ A self-employed individual in age range of 25-70 years.
- Ensure you keep the documents required by financial institutions ready to avail loan against property-
~ Proof of address.
~ Proof of identity.
~ KYC documents (Aadhaar, PAN.)
~ Salary slips.
~ Bank account statements.
~Income tax returns, proof of business, balance sheet etc. for business professionals.
~ Property registration, blueprint, etc.
~ No objection certificate from a local councillor.
- Improve your credit history as financial institutions don’t tend to approve loans to individuals with a poor credit score or poor credit history.
- Maintain a fixed obligation ratio of 50% or below. This makes lending institutions believe you are capable of repaying EMIs for loan against property.
- Don’ts -
- Do not try to avail loan against a property that is already pledged as collateral.
- Do not keep the co-owners of property out of knowledge.
- Do not pledge a property if it is the only residence and you aren’t confident about being able to repay.
Note that a loan against property involves a mortgage where you transfer the interest of your property. The lender reserves the right to liquidate your property in case you fail to repay and default on the loan availed.