Preparing for Loan Against Property Appraisal

Mortgage Top Up or LAP appraisals are the additional funds that lending institutions offer to the existing loan against property applicants, depending on the need. Loan against property appraisal depends on certain factors, such as Loan-to-Value (LTV) ratio, income eligibility and no bounce in the ongoing mortgage loan.

Mortgage / Property loans are acquired for both personal and professional needs. Business owners who have access to colossal property and assets generally acquire LAP funding to expand and upgrade their existing business. With ongoing time the need for credit funds also increases, and using the property, one can grab the top-up or appraisal on the ongoing loan against the property.

Loan appraisal is the additional amount that lenders allow borrowers to take in case of additional fund needs. But here the question arises “How Banks evaluate the criteria to whom the appraisal/top-up should be allowed” and How the involved factors are assessed and investigated? Today’s discussion will be an interesting one as we will be talking about the ways to achieve Loan against property (LAP) appraisals. Keep reading to learn more.

How do Banks/NBFCs evaluate eligibility for appraisals?

Nearly all lending institutions follow a set of criteria to identify the applicant’s eligibility for loan against property (LAP) appraisals. There are nearly 3-4 factors upon which loan the appraisal evaluation is done.

Property Gap & LTV Ratio

When an applicant has acquired a loan against property funding before top-up, he must have pledged some of his property to the lending institution. Suppose a lender has pledged 60% of the property previously, then the top can be acquired by pledging the remaining property upto 75% in the case of residential.

Also, one can acquire the amount as credit funds as a top-up that he has repaid during the tenure. The property gap is an essential factor that lenders evaluate before approving the appraisal. Depending upon the loan-to-value (LTV) ratio, the inspection is done. LTV is calculated easily by taking the loan amount and dividing it by the asset/collateral value that is being pledged.

LAP funding varies in percentage in case of all three property types. In the case of residential property, 75% is the limit for Loan against property funding, while in commercial and industrial property, it is 60-65% and 50-55%.

Mortgage condition

While evaluating the eligibility for a loan against property appraisal, the lender will cross-check the property/collateral condition. The property using which you are acquiring top must be in working condition. In case any default, such as demolishment or tear down is found, it may declare you ineligible for the top-up.

Income Eligibility

It is one of the crucial factors lenders will assess and is needed to acquire top-up in the existing funding. In the duration of an ongoing loan, if the applicant's income increases, then he fits the eligibility criteria to get the appraisal. The increased income is a sign of increased loan eligibility; one can possess more credit facilities with increased income.

Check your eligibility using Loan against Property calculator!

Full clearance /Clear repayment track

At the time of applying for the top facility in any of the loans, either in a mortgage or other loans, be very sure that all the existing and previously borrowed amount is repaid as per the terms and tenure decided. Your loan top-up application may get rejected if any EMI bounce or non-repayment is found. Make sure your CIBIL score is upto the mark and no dues are left to repay as per the tenure.

[Note: Loan against Property Top-up/Appraisal is eligible only after 6 months of the existence of the previous LAP loan.]

Credit score

CIBIL scores are crucial even if one is applying for the Top facility. Ensure you have a clear record with no dues and outstanding amounts, including credit card bills. CIBIL score of at least 700 or above is required to attain appraisal facility.

[Note: Lenders have the right to reject appraisal applications in case dues and non-payment are found.]

Check your credit score for free!

Interest rate and Processing fee charged on Top-up loan against property appraisal

A separate interest rate is charged on loan against the property (LAP) top-up facility at a similar rate to the existing LAP (Depending on market conditions and other involved factors). The interest rate starts from 8.90%, and the processing fee charged is upto 1%. (Applicants can negotiate with the lender for processing fees and interest rates, depending on a profile to profile.)

[Note: Check the lender’s official website before closing your LAP top-up deal.]

Loan against property Top-up process

One can apply for a top-up on a mortgage loan using both online and offline basis. Either visit the nearest branch or apply online at the lender’s official website. You can simply contact OneNDF to get the leading top-up and other loan services. Give a missed call at +917810844844 to discuss your requirements.

Documents required for LAP appraisal

Name and Address Proof - PAN card, Aadhar card, Residence & office proof

Document for technical process

Income Documents

Latest 12 month's loan account statement

Salaried

Self-employed

Last 4-month salary slip

6 months' bank account statement

2 years FORM 16

3 years ITR

Income computation

P&L account

Balance sheet

CA certified financials

12 months' statements of bank accounts

Business proof - Incorporation certificate, MOA/AOA

[Note: Documents required may vary from lender to lender, check the lender’s official website before closing the deal]

To the End of it

Loan against property appraisal facility has made it easier for borrowers to access more credit funds in ongoing loans. If you have an ongoing loan and still need more credit funds, it is much better to go with appraisals rather than taking a new loan. Before giving approval to the borrower, lenders have made benchmark criteria to evaluate the eligibility.

Lenders evaluate appraisal eligibility based on the factors discussed above. A separate interest rate will be charged on the additional appraisal loan. If you are ready for the appraisal, be prepared with the documents mentioned above and talk to the OneNDF team to sign the best possible deal.

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Preparing for Loan Against Property Appraisal: Frequently Asked Questions

Q.1 Can we Top up the loan against the property?

The amount raised from the top-up loan can be used for any purpose, personal or professional related to the existing property.

Q.2 Are top-up loans good or bad?

Top-up loans affect applicants in both ways and impact the CIBIL score equally like any other loan in case of non-repayment or default.

Q.3 Who is eligible for a Top-up loan?

Top-up loans are generally offered to customers who have existing relationships with lenders along with good credit scores and repayment capacity.

Q.4 What is a Top-up loan on property?

A top-up loan or extra loan is a financing option that is offered to customers over and above the existing loan amount.