The Do’s and Don’ts in Loan Against Property

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Did you know that if a property has multiple owners they all need to be co-applicants for a loan against property? A loan against property is the ideal funding option for those looking for a high financing option, longer loan tenures, and lower interest rates. Lenders also keep the loan against property documents required for its sanctioning to the minimum along with simple eligibility criteria.

Loan Against Property

The Loan Against Property
The Loan Against Property

 

However, even with minimal requirements, a customer has to keep a check of all the dos and don’ts of a loan against property:

Dos:   

Ensure you meet the Eligibility Criteria

Banks and NBFCs need salaried individuals to be between the ages of 33 and 58 years; for self-employed, the age limit is between 25 and 70 years.

Salaried individuals need to be employed with a public or private enterprise, and self-employed customers need to have a business with a constant source of income.

Keep all the Personal Documents close

The Loan Against Property Documents Required by financial institutions includes Passport, Voter ID card, Aadhaar Card, Driving License, PAN card, or a valid photo ID card issued by a government or private employer.

As address proof, applicants can provide any KYC document containing their permanent address. They can also provide their telephone bill, electricity bill, gas bill, or post-paid mobile phone bill.

Make sure you have your Property Documents

Your property documents are one of the critical requirements for getting a loan against property sanctioned. Banks and NBFCs may require any of the following property documents: property registration/patta/sales deed/gift deed, property map, Chain of Title, No Objection certificate from a local government body.

These are a critical loan against property documents required for its processing and quick disbursal within 24 hours.

Audit Business Turnovers

For banks and NBFCs to know the income of a business, turnovers are the only option. Hence, businesses need to audit their turnovers for the previous year by a CA.  

Income Tax Returns

Salaried and self-employed individuals need to file income tax returns for at least the previous year. For businesses, furnishing income tax returns is compulsory; further, they also need to have a minimal vintage of 3 years.

Keep a Healthy Credit Report

Your credit report will reflect the detail of your credit history. The reports reflect the number of loans availed by the customer, their total amount, the duration, types, usage of the credit limit, timely payments of outdating credit, and the number of credit inquiries made by lenders.

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If satisfactory, then all these aspects would reflect positively on the credit report. A healthy credit report is a crucial loan against property eligibility criteria.

Keep a Healthy Credit Report

 

Lower your Fixed Obligations

Banks and NBFCs require customers to have their monthly fixed obligations or FOIR below 50% of their total income. The lower the FOIR, the more eligible would an applicant be to avail a Loan Against Property.

Don’ts

  1. Don’t avail a loan against a property for situations not severe enough.
  2. In case the property is a residence, then owners should not let it out.
  3. Never avail another loan on a property already pledged as a collateral for an existing loan against property.

Loan against property benefits are immense, and one can avail all of them by following the dos and don’ts mentioned above.