Topic 3: Can I get Loan Against Property If the Property Is on My Forefather’s Name?

LAP – Loan Against Property is an interesting form of a loan. Let’s first understand what is LAP. Loan Against Property is a secured type of installment-based loan. When you have a property, and you put that property on a mortgage to get the loan amount, its LAP. If someone is struggling to get a loan, specifically when the credit score is not good, banks generally deny the loans. The reason being too specific, about the sustainability of the person. The creditworthiness of that person is low. What can be done in such instances? At these instances, when one is planning for a bad credit fix, the secured type on loans help. LAP is one the secured kind of loan. Suppose if the customer takes off his/her hands to pay the EMI of the amount left, bank or NBFC in that matter can seize the property, sell it and get the amount back. However, this is not as easy as it looks. There are various factors which are taken into consideration while the LAP is applied.

Who can apply for it? What are the conditions? How is the interest rate calculated? Should the property be compulsorily on the person’s name who is applying for the loan?  Let’s Decode this one by one.

Who can apply for it?
Any salaried or self-employed person, who can bare the installment of the property which is kept against taking a loan, can apply for it. For example, if my Salary is 25,000/month and the installment of the loan which is kept against a property is 35,000, then I can’t apply for it or get the LAP. Also, there are various factors which are considered, we shall discuss those in following instances.

What are the conditions?
Not all the properties could be kept against to take a loan. Only the Residential properties, Commercial properties or industrial properties can be kept for a loan against it. Agricultural plots, areas which are very near to river banks and ocean beds, near creek beds are not taken into consideration for LAP. There are various reasons why they can’t be taken. One because they are very fragile lands. The agricultural land had various variation and its highly volatile when it's about buying and selling it. When we talk about the lands which are near to water places, they are nondurable. With the flow of water, they can change or even get washed away. So, for that reason, one cannot get a LAP over these kinds of lands.

Should the property be compulsorily on the person’s name who is applying for the loan?

            The property should not be compulsorily on the applier’s name. So, there are two possibilities how LAP can be availed. First is when the property is on the applicant’s name. So, in that case, he/she can apply for LAP. Else, If the property is on someone else’s name who himself/herself is not applying for the loan, then, in that case, the applicant should be given the authority of keeping a property on the mortgage. It should be either power of attorney or the undersigned papers by the property owner which gives the authority to the applicant that he/she can take the decision for that property.

Can one get it on the property which is on forefather’s name?

There are various factors that are to be considered when it comes to the forefather’s property. In general cases, especially in India, the forefather’s properties are generally not legally sorted. The precedents are either fighting for the property or unaware of whom it was allocated, or the matters are unsolved. LAP can be given to only those cases when the precedent is clear and given the permission to do anything with the property. Any property which is legally registered and got ROC can be taken into consideration. Also, if it is distributed amongst more than one precedents than all should sign the agreement saying they have no objection if the applicant is putting an application for LAP.

So, if you are planning to take a home loan at 12.25% interest rate, but you are getting 11.75% interest rate for the property you have of you forefather with the NOC certificate from your grandfather and his brothers, or your father and your uncle and aunt’s, its a better option to opt for!

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