Questions You Should Ask Yourself Before Applying for a LAP

Questions You Should Ask Yourself Before Applying for a LAP

Availing any type of loan has become a cakewalk these days. This has been possible due to the number of lenders available and the digitisation process. The process to avail a loan is simpler as everything available online or even you can call the lender for information like eligibility criteria, documentation process, interest rate and much more. In case you are planning to take a loan against property, a debt instrument under which the property is mortgaged for a certain amount is known as Loan against property or mortgage loan. It can be availed against the residential as well as the commercial property, there are several conditions related to it. Before you go to a lender with your enquiry, here are the few things that you need to know:-

  1.  Can your monthly Income Afford it?

The decision to take a loan against property is not based on mere gut instinct, but you decide to take a mortgage loan when you are need of large sum money. On paper, you may seem eligible but it is important to understand whether you will be able to pay the EMIs of the loan from your income that you are earning. While paying your EMI you should not drain every penny, you should be left with the money with which you can do the other household expenses. Also, for every income level, there is a fixed obligation to income ratio which is a determining factor how much loan amount can be borrowed.

  1. Check your Property Value

Checking the value of your property is important is it is one of the important eligibility factors after income. Ensure that all the documents of the property are in place, whether you are mortgaging the house, apartment, factory or a shop. The property is valued on factors like market value, location, type of property, it helps in getting the value of property in a fair manner. Usually, the Loan to value (LTV) ranges between 40 per cent-70 per cent of the property’s market value.

  1. Dig history of your property

Be aware of the past of your property. To answer the questions of lenders related to the property you are mortgaging it is important for you to know the past and not only the current value of your property. Past is important especially if you have inherited the property if you have purchased already used property- then who were owners and documents related to such change. In case a lender does not get a satisfying answer then your loan can be rejected as well.

  1. Do your Homework

Explore the market, enquire from various banks and financial institutions. It is advised that search online as if you enquire from the bank directly there are chances that your loan can be rejected as well. It is not only important to compare the interest rates but also other hidden charges like- processing fees, foreclosure fee, sales tax and many more. Research as much as you can and then select the loan plan according to your needs.

  1. Get the Right Offer

You have to be smart enough to differentiate between attractive offers and fraud. Always trust the reliable sources for the information, it is better to meet in person rather than just believing in word of mouth. You have to be sure enough with a loan offer as you are going pledge your asset as collateral. Once you decide the lender then you should go ahead with the process.

  1. Will I get tax benefits?

When a borrower applies for a mortgage loan, then he/she is not entitled to tax benefits which you get in other types of loan. If you want to avail tax benefits then you should apply for a personal loan.


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