Emergencies are ‘unexpected guests.’ They do not come up with a ‘wakeup call.’ At one point, you do run short on funds. In such unwanted situations and in need of cash, you need to opt for loans from banking institutions. Be it an accident or expenses related to a wedding, money is required. Each and everything depends on the money you behold. You can opt for a LAP from a banking institution. Before that, let us re correct some of the myths related to LAP. People must also have documents required for loan against property for further convenience.
1. You can avail a LAP at full value.
None of the lenders would grant you a loan, pertaining to the entire value. It is not true. Potential lenders issue 60% – 70% of the loan on your property value. Since you need to keep the property in the form of collateral, the lender will also have to keep the margin to themselves.
2. You can avail a LAP on residential property
A property has various types. It can either be a house, office, land, plot or shop. It must just hold accurate and ethical financial documents.
3. Mortgaged property is of no use
This is the case with most of the homebuyers. They have a misconception that, if they mortgage a property, they will not be able to use it. This is not true. You can stay under the property that has been mortgaged. For instance, if an office or shop has been mortgaged, a business can still be on track.
4. Interest rates are higher
If you think that you will have to pay a higher interest, that is not true. If you opt for a LAP, it depends on the amount, type and credit score.
5. LAP is for one and all
This applies for employees who are Salaried, Self-employed and have the capacity to be able to repay.
6. LAP schemes
Fedfina, for instance, provides a bunch of schemes for property types like,
- Loan Against Commercial Property
- Loan Against Residential Property
- Lease Rental Discounting
- Commercial Property Purchase Loan
If the myths that you have heard about the LAP have been busted, you can consider opting for one. If you change your mind, the documentation procedure includes,
| For Salaried Individuals | For Self-employed Individuals |
| Duty Filled Application Form with Photograph | Duty Filled Application Form with Photograph |
| Latest Degree | Latest Degree |
| Salary Slips (past 3 months) | Certifications and Business Proof & Profile |
| Bank Statement (6 months) | Bank Statement (12 months) |
| Photocopy of the titled Documents of Property Approval | Photocopy of the titled Documents of Property Approval |
Note: This procedure is with regards to PNB Housing Finance Ltd.
You can also look into the rates provided by other banking institutions,
- ICICI Bank: Provides a tenure of up to 15 years and an amount of up to 5 Crore. The minimum age is 25 years and maximum age is 65 years.
- SBI: The interest rate provided is 6.90% p.a. Minimum monthly income must be INR 25, 000 or INR 3 Lakh p.a.
Now that the myths have been cleared and rates have been looked into making a wise choice and do not regret later. This is because acquiring a loan is not a piece of cake. You need to consider the repayments. Do not believe in unnecessary myths, until you have verified it with a bank official.
