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Things to Do's and Don'ts While Applying For Property Loan

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.

The property loan if utilised wisely, can bring you more benefits than you have estimated. To do so, here are a few dos and don’ts one must follow.

  • Do’s - 
  1. 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.
     
  2. 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.

     
  3. Improve your credit history as financial institutions don’t tend to approve loans to individuals with a poor credit score or poor credit history.
     
  4. 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 -
  1. Do not try to avail loan against a property that is already pledged as collateral.
  2. Do not keep the co-owners of property out of knowledge.
  3. 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.

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