Securing a mortgage property loan in India is much less of a hassle today due to the availability of several credible lenders online. One can get up to a loan of Rs.5 crore by pledging a commercial or residential property as security.
Nevertheless, factors such as interest rates, loan-to-value ratio, and credit score come into play when applying for a mortgage loan. Thus, this article discusses the key points to consider along with eligibility and steps to apply for a loan against property.
4 Important things to consider before applying for a property mortgage loan:
Before applying for a loan against property, one must be aware of the following factors:
Property mortgage loans offer great flexibility to their users in terms of purpose. This means that borrowers can use the money for multiple purposes like clearing outstanding debts or pursuing higher studies once sanctioned. Loan seekers can also kick start their dream by applying for a LAP to start a new business.
Value of the Property-
The loan amount in a mortgage loan depends on the type of asset being pledged. In a LAP, the loan value gets decided based on the condition, location and accessibility of the property. For instance, a well-maintained building or house in a developed area with a sound transport system and amenities nearby will get a better loan offer. In contrast, an old property in an isolated area may fetch only a small credit amount.
Loan-to-value ratio (LTV)-
The loan-to-value ratio indicates the maximum amount of a property’s market value that can be procured as a property loan. One can secure up to 70-75% of the property’s value in a loan against property.
Borrowers must also note that LTV is a primary determinant of loan amount eligibility. Consequently, the risk increases with a higher LTV as lenders offer more money against the property value. On the other hand, a lower LTV often comes with lower interest rates and other attractive offers.
A good credit score indicates that one has maintained a healthy credit history, cleared off outstanding debts, and can manage their finances. In India, lenders consider a score of 700 or above to be favourable for a loan sanction. Hence, keeping a clear payment history will help borrowers obtain a higher credit amount at the lowest mortgage loan interest rates.
Moreover, some lenders may provide pre-approved offers to their existing customers. These are available on several products including LAP and home loans and significantly speed up the loan approval process to save time and reduce hassle. To check their pre-approved offers, applicants need to simply enter their name and contact information.
How to apply for a loan against property?
Here are 4 simple steps to apply for a loan against property:
Step 1: Navigate to the official website of a financial institution and fill out the application form.
Step 2: Next, enter the necessary personal and property details.
Step 3: Enter the financial and income details to get the loan amount and other available offers.
Step 4: Finally, click the submit button to complete the loan application.
In addition, borrowers must also have the documents necessary to apply for a LAP.
Who is eligible to apply for a loan against property?
Both salaried employees and self-employed persons are capable of applying for a loan against property.
However, in order to be eligible, borrowers in each category must fulfil the following conditions:
- Nationality: Applicants must be Indian nationals.
- Age: For those who are salaried, the age restriction is 28–58 years; for those who are self-employed, it is 28–70 years.
- Salary: Salaried workers must have at least three years of experience working for an MNC, a private or public sector institution, etc. On the other hand, a self-employed individual should have a reliable source of income.
A mortgage property loan is an effective financial tool that can help borrowers to take care of their financial responsibilities and emergency expenses. Moreover, online applications have made loan procedures easier than ever. With the right eligibility match and necessary documents, one can apply for a mortgage loan instantly.
However, high-value loans such as LAPs require sufficient research and consideration. Therefore, before coming to a decision, one should take the above-mentioned points into consideration.
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