A financial emergency can erupt at any time for anyone. It is the time when you desperately want to raise funds to meet the crunch.
At this time of desperation, you can use your savings, borrow money from friends and family, or approach to a lender for a loan. Banks and NBFCs are an excellent option to get a loan to meet your fund requirements. They offer a variety of investments, out of which, loan against property is something you must consider.
What is a Loan Against Property?
It is a secured type of loan where you use your property as collateral to get funds. The property can be a house or residence where you are currently residing, a rented property, and a piece of land or any building under construction.
An essential condition is that the property should be free to pledge as collateral, and its title should be clear.
Who can avail a LAP?
Any private firm, partnership firm, self-employed or a salaried individual who can arrange for and pledge property as collateral can avail this loan. As it is a secured loan, the rate of interest applicable to it is lower than the interest rates on any other loans, like a personal loan. Depending upon whether you are a self-employed or a salaried individual, you need to submit some documents and carry out all the procedure for the loan application.
Documents to avail a LAP by a self-employed
The application process for a loan against property is easy, hassle-free and straightforward. As it is a secured loan, the loan against property documents that you need to submit are also fewer. Here is a list of materials which a self-employed individual have to be ready with if he is planning to apply for a loan against property:
- A duly filled application form: This is the first and the foremost document which you have to keep ready. You can download an application from either the website of the lender or can get it in hard copy from the lender’s office or branch. Fill all the required sections and submit it along with other necessary documents.
- Identity Proof: This is a document which confirms your identity. Along with PAN card, which is mandatory, you can submit any one of the following as a proof of your identity:
- Aadhar card
- Credit card with a photo
- Driving license
- A government-issued ID with photograph
- A letter or certificate of your identity vouched by a distinguished or reputed public authority with your picture, not older than 30 days.
- Passport with validity
- Voter ID
- Address Proof: The proof to verify the address of your residence or place of business is also must for the lender. Along with the list of documents mentioned above, you can submit any one of the following documents:
- Bank Statements with your address
- Latest statement of your credit card
- Latest bills, like electricity, telephone, etc.
- Life Insurance Policy
- Pension or family pension payment orders (PPOs)
- Property Tax receipt
- Rent agreement of the property on a stamp Paper
- Sale Deed of your residence
- Statement of Post office saving bank account
- Income Proof: This is the document which the lender is most keen to have. Your income indicates your financial status as well as your loan repayment capacity. You may provide the following documents to verify your income.
- A profit and loss statement, a balance sheet, and all the annexures are valid documents. A Chartered Accountant must audit all
- Income tax return certificate of the past two years
- Statement for the previous six months of the current business account and your savings account
- The documents of current loans, if any, and its repayment statement for last six months from the lender
- Document of shareholding pattern certified by CA or CS
- Memorandum of agreement or partnership deed of your business
- Documents of your property: All the relevant documents of the property you are going to use to avail a loan.
A self-employed individual can easily avail loan against property by submitting minimum documents to the lender.