Dos and donts and LAP

Do’s and Don'ts of Applying for a Loan Against Property

A Loan Against Property (LAP) is a low-cost way to ensure funds are available when needed. This is a secured loan, and you mortgage your property for the loan. Because you entrust your most valuable asset to a lender, you must exercise extreme caution with such loans.

LAP is typically used for business purposes by self-employed businessmen, professionals, and entrepreneurs. Banks and Non-Banking Financial Companies (NBFCs) are comfortable with a property's backing. However, borrowers seeking loans through this route should remember that only a portion of the property value will be granted to them (depending on their property value).

To help you understand loan against property required documents, online LAP application, and LAP interest rate, we've compiled a list of important dos and don'ts. So, when you are going for applying LAP online, we can help you with what you must do:

Shop around for loan value and LAP interest rate:

This is the most important thing when applying for a loan. Always speak with representatives from two or three different lenders, including banks and NBFCs. Obtaining a loan is similar to purchasing any other product. You are free to haggle as much as you want. Remember that even a half-percentage-point reduction in the LAP interest rate can save you thousands, if not lakhs, of rupees in the long run. Play the lenders' agents against each other to ensure you get the best interest rates and property valuation deal.

 

Choose a reputable lender:

It is critical to select a reputable company from which to obtain a loan. You can be confident that they will take good care of the property papers you keep with them as mortgage security. Always check the loan against property required documents for an online LAP application. If you believe there is a remote possibility that your property papers will be lost or misused, walk away from the transaction immediately. No matter how rushed you are to obtain a loan, never risk your most valuable asset to an untrustworthy counterparty.

 

Maintain a high CIBIL score:

Most people believe that a high CIBIL score is required to obtain a loan and that once the loan is accepted, they can let their score fall. This is an entirely wrong approach to credit scores. Your credit score connects all of your credit instruments. If you pay your Loan Against your Property on time but neglect your other loans or credit cards, your property loan interest rates will suffer. Keep a close eye on your CIBIL Score.

 

Keep an eye out for loan MITC:

The MITC (Most Important Terms and Conditions) is a document that all lenders provide meticulously when they deliver a loan agreement, but almost no one reads it. The MITC document briefly references all standard loan repayment, pre-closure, loan foreclosure, property repossession, and other conditions. If you carefully read the MITC document, you won't even need to call customer service and wait on hold for the most common questions.

 

Save some loan amount for an emergency:

As with any other loan, it is strongly advised to set aside some money from your loan amount as a few months' EMI to cover your payments in the event of an emergency. The norm is to keep six months of EMIs with you, and at the very least, you must keep two months of EMIs with you at all times as emergency funds. This will protect you in the event of salary delays, job losses, or any other problem that affects your income. Keep in mind that this money is for an emergency. Only if your income suddenly stops should you use this emergency fund to cover your EMIs until you can find a new job.

 

Do not give anyone your original KYC documents:

It goes without saying that your identity is one of the most critical aspects of your life today. Unfortunately, people are victims of identity theft every day and are held accountable for actions they did not commit. This can range from someone buying SIM cards in your name to discovering that someone has taken out fraudulent loans and credit cards in your name, leaving you stranded. Therefore, keep your KYC originals with you and only handle the canceled copies. Also, do not allow anyone to photograph your KYC documents.

 

Do not skip any of your EMIs:

You have taken out a loan and must pay back in EMIs, but you will often be tempted to skip an EMI. Never succumb to this temptation. Even one missed EMI will result in significant penalty charges and hit your credit score. EMIs should be budgeted for each month and paid ASAP.

 

Never go over your monthly budget:

If you ever take out a loan, you will be stressed about repaying the money. Making and sticking to a monthly budget is a great way to avoid stress. Control your spending and direct every rupee of your earnings. Remember that if you don't tell your money where it goes, it will soon start telling you. So create a budget, account for all EMIs and expenses, and stick to it.

There may be times when you require funds but do not have any on hand. It's not uncommon for people to put their extra cash toward real estate. It provides them with returns while also expanding their portfolio. However, liquidating real estate in a short period of time can be difficult. Fortunately, the concept of a loan secured by real estate exists. You can borrow money against your property to meet your financial needs. Remember that a loan against property is an excellent way to get money in an emergency. However, it must be used with caution! So, what are you holding out for? 

If you’re looking for a reputed lender, you can apply LAP online right away to meet your needs with Poonawalla Fincorp. With LAP interest rate starting at 9%, you can get a high LTV of amount up to Rs 5 crores with a flexible repayment tenure.

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