It happens to all of us— an emergency out of the blue, when there is an urgent need for funds to get over a particularly stressed time, a personal crisis involving a family member, or something job or business-related. Relatives and friends have raised their hands in helpless surrender. What do you do? How about taking a hard look at a property you own and seeing how it could be leveraged to get out of the sticky situation?
We are talking of the loan against property or LAP, with a property in your name as collateral for the loan. The twin advantage of LAP is it fetches a bigger loan amount as it is a secured loan with collateral attached, and, two, LAP’s tenor or tenure is longer compared to that of the personal loan.
Salaried and Self-Employed People
Different banks have different eligibility conditions for LAP, but there is a common stock set of criteria for all banks. However, the focus here is on documents required for loan against property, which is different for salaried applicants and self-employed and business people.
Salaried applicants for LAP should submit proof of identification which could be a PAN card, passport, driving license, voter ID, employee ID, or any bank’s passbook or the ration card.
All the Proofs You Need
Similarly, address proof for loan against property could be passport or utility bill of any of the last two months; letter from a government department, bank passbook or bank a/c statement; voter ID, ration card or LIC policy/receipt.
Again, loan against property documents required includes residence ownership proof. This could be property documents, maintenance bills, or electricity bills.
Proof of Your Business
Proof of income is also a must document to apply for a loan against property, which could be a payslip of any of the last two months; increment or letter of promotion, IT returns of the previous three years, Form 16, or authorized letter from employer confirming income.
Other loans against property documents required include proof of job continuity, documents regarding any existing loans, investment proof of fixed deposit, fixed assets or shares, copies of all property documents (sales deed, etc.), and advance processing cheque.
For the self-employed and business people, documents to be submitted include proof of identification, address proof, residence ownership proof, office address and ownership proof; proof of business existence, which could be sales deed/agreement; Salary copy (three years old), copy of tax registration or company registration license.
Here is a list of the documents you need for LAP:
- Proof of income
- Bank statement
- Copies of all property documents
- Advance processing cheque
- Passport size color photograph
- Investment proof
- Evidence of existing loans or lack thereof
- Professional degree certificate
Age Limits for the Applicant
These apart, other mandatory requirements include those related to age and income, and work experience. The age requirement says the age of the loan against property (LAP) applicant should be more than 21 years at the time of applying for a loan against property and for which documents must be required should be duly submitted. The age limit cannot exceed 60 years.
Proof of Work Experience
The other condition about income says that the applicant’s monthly income should be one and a half times that of the EMI. In the case of a salaried employee, the minimum monthly payment should not be less than Rs. 144000 per year.
Last but not least, the applicant should not be without a job when applying for a loan against property. They should have been working continuously without a break for at least two years with the same company if they were salaried employees. The self-employed and business people must have had the same status as self-employed and businessmen for continuous three years. Valid documents of proof should be submitted without any exception.
Summing Up
So, here is how it is done. Step one is to apply for the loan. In step two, the lender does the processing of the application. Step three involves “documentation.” Step four is when the loan is sanctioned, and a sanction letter is issued. Step five is when loan officers arrive to value the property set as collateral for the loan against the property. And finally, the last step is when the LAP is deposited in the borrower’s account.
