Documents Required for Loan Against Property

Meeting certain expenses like renovating your home, paying your child’s overseas education fees, or medical emergencies in the family may require a substantial sum. And if you don’t have enough savings, or if you don’t have enough limit on your credit card, you may find yourself in deep financial and emotional trouble. 

In such a situation, you can use your real estate property to your advantage and apply for a loan against property. This is a type of secured loan where you can pledge your asset to the lender and avail of a loan against it. 

Just like availing any other kind of loan, when you apply for a LAP, you must know about the loan against property documents required by the lender, which may vary from one financial organisation to another. So, in this guide, we discuss the documents required to get LAP. But first, let us understand what a LAP is.  

 

What is a loan against property?

A loan against property or LAP is also commonly known as a mortgage loan. When you apply for LAP, you pledge your asset to the lender and get a loan against it. The property remains with the lender until you repay the full amount. 

One of the significant things to know about a loan against property is that the interest rate offered on this loan is usually lower as compared to an unsecured loan like a credit card loan. This is because the lender has the security of the collateral. If, for any reason, you fail to repay the borrowed amount, the lender has the right to sell off the property and recover the amount. 

 

Documents required for loan against property

Now that you know what LAP is, let's discuss the loan against property documents. There is no standard rule for the documents required for LAP; they may vary from one lender to another. But generally, most lenders in India, including NBFCs (Non-Banking Financial Companies) like India Shelter Finance Corporation, have a simple documentation process so that you don’t have to worry about dealing with complex paperwork. 

The documents required for LAP include are mentioned in the table below:

 

Document Type	For Salaried Employees	For Self-employed or Professional
Proof of identity and address	Aadhaar Card, Valid Passport, Voter ID, Bank Passport with Photo	Aadhaar Card, Valid Passport, Voter ID, Bank Passport with Photo
Proof of income	The salary slips for the last three months that show all the deductions and ITR (Income Tax Returns) or Form 16	IT returns or financial documents for last two years, and computation of income certified by CA for the last two years
Bank statement	The bank statement for the last six months shows the income credit	The bank statement for the last six months shows the income credit
Proof of other income	Rental receipts or any other documents showing income credit	Any document showing additional income other than their profession or business
Property documents	Copy of the title documents and the building plan as sanctioned by the local authorities	Copy of the title documents and the building plan as sanctioned by the local authorities

 

 

Features and benefits of loan against property

Getting a loan against property can be the best financial decision you can make when you need access to funds immediately or during an emergency. Besides, it offers many benefits, including –

 

• Extended repayment tenure

When you apply for an unsecured loan, such as a credit card or personal loan, the lender offers the credit only for a limited period. The maximum repayment tenure for such loans is generally five years. Repaying the amount can be a financial burden as the EMI (equated monthly installment) tends to be high. 

But, when you apply for a LAP, you can avail the credit for a longer period. The repayment tenure extends up to 20 years, which makes it easier for you to repay the amount as the EMI stretches for that period. 

 

• High LTV

LTV means loan-to-value ratio. So, when you apply for a loan against property, the maximum credit amount you can avail mainly depends on the current market value of the property you pledge as assessed by the lender. 

Generally, most lenders in India offer only up to 50% of the property’s value as a loan. However, some lenders like India Shelter Finance Corporation offer a higher LTV of up to 60% of the property’s value. This means you can get the desired amount and meet the expenses without any hassles. 

If you pledge a residential property, you can get up to 70% of the property’s value as a loan. 

 

• No restrictions on the usage

Another significant benefit of a loan against property is that you can use the funds for any purpose. Generally, the lenders do not have any restrictions on the end usage of the funds as long as you use it for legal purposes. 

For example, you can use the funds to pay medical bills, go on a luxurious vacation with your loved ones, meet marriage expenses, purchase another property, etc. 

 

• Affordable interest rate

When you avail of any form of credit, you may inevitably consider the interest rate levied by the lender as it directly impacts the EMI and affordability. And, unlike unsecured loans, the interest rates for LAP are usually lower. 

When you apply for LAP with reputed lenders like India Shelter Finance Corporation, you can get the loan at affordable interest rates, starting from 8% per annum. 

 

Final Word

Applying for a loan against property is a great way to get the desired funds for all immediate and emergency needs. And since you pledge your property as a security for the amount you borrow, you must know about the property documents required for a loan against property and other important papers required by the lender well in advance so that you can keep them ready beforehand. This will help you avoid any last minutes, which, in turn, can cause delays in the application or approval process.