Product Info Loan Against Property

Loan against Property (LAP) is more generally known as 'Home Equity Loan.' LAP is specifically designed for an individual who already owns a property and is in need of borrowing some finances. But the property against which he is taking up the loan amount must be free from any encumbrance, i.e., it is not offered as security for any other purpose.

Loan against property can be taken against one's self occupied residential or commercial property. This type of loan serves many purpose like expanding one's business, planning a wedding or funding your child's education. But while availing this loan, one needs to state and assure that the loan amount is not being taken for illegal purpose or indulging in any speculative activity.

Loan against property is the most secured form of availing a loan facility. Under this, the borrower pledges a collateral in the form of property against the loan amount. The borrower still maintains the right of ownership of the property and in case he is unable to repay back the loan amount, he can sell the property to pay off the debts. People mainly take up loan against property either to start or expand their business. Moreover, this type of loan is widely used to repay the existing high rate of debts.

Mode of Payment

• The borrower can go for overdraft option as he has to repay interest only on the amount withdrawn. However, the disadvantage accompanying this facility is that only the banks offer such services as housing finance companies do not offer savings or current account. Moreover, overdrafts carry a high rate of interest as well as involve high annual processing fee, so as a borrower you have to shell out more.
• The other option is that the borrower can pay his loan amount in EMIs through post-dated cheques or through ECS to debit his Bank account through ECS with the EMI amount. This installment plan is available with both banks as well as housing finance companies. Moreover, the processing fee will be a sort of one time payment. EMIs carry with them a lower interest rate, and are hence the most convenient way to repay back the loan amount.
• The borrower can also prepay the entire loan outstanding anytime after 180 days of availing the loan. Pre-payment charges will be levied accordingly. If the borrower intend to do so, he needs to ask for the pre-payment amount to be waived or a reduction in the penalty charges.
• One can choose from either fixed or floating rate of interest. There is also the option of changing from fixed to floating exchange rate and vice-versa.
  

1. 1. PROOF OF IDENTITY (any one)

• Photo PAN Card
• Passport
• Driving License

1. 2. PROOF OF AGE

1. 3. PROOF OF SIGNATURE

• Banker's verification
• PAN Card
• Passport

1. 4. PROOF OF RESIDENCE (any one)

• Paid receipt of latest maintenance like Water tax, municipal tax and any such taxes.

1. 5. PROOF OF INCOME (Salaried)

• Form 16 along with salary certificate from the employer
• Last 6 months bank statements of main bank account

1. 6. PROOF OF INCOME (Professionals / Self-employed)

• I.T. returns for past 3 years - Latest income tax assessment order (for overdraft amount of over Rs. 5 Lacs)
• Income certificate from appropriate revenue authority like Tehsilldar/BDO/SDO (for agriculturist)
• Last 6 months bank statements of main bank account.

1. 7. PROPERTY DOCUMENTS

• Original title deeds of the property offered for mortgage
• Non encumbrance letter from co-op society; Permission to create Equitable Mortgage from society