Sometimes, individuals may need additional funds for significant life events like a marriage or higher education or to finance business expansion plans. In such cases, a micro Loan Against Property (LAP) from Hero FinCorp can be highly beneficial. These are secured loans where you borrow against the property you own. The advantage of micro LAPs is that they are relatively easy to access and typically come with lower interest rates compared to unsecured loans.
The following sections will discuss what micro LAP is and everything you need to know about these funding options.
What is Micro LAP?
Micro Loan Against Property means a secured loan you can borrow by providing your residential or commercial property as collateral. You can use these loans to tackle various planned and unplanned expenses. Whether you want to set up a new business or finance your child's education or marriage, a Loan Against Property can cover your funding needs.
LAPs are feature-rich loan schemes offering several benefits to the borrowers. Consider these features and benefits when applying for one:
Easy Application: Since a micro Loan Against Property is a secured loan, it poses minimal risk for the lender. Therefore, getting these loans is easier than unsecured loans despite a low credit rating.
Flexibility: You can borrow a loan of up to Rs 7.5 Crore, depending on your property’s value. The loan is also flexible in terms of repayment, as you can choose a repayment term of up to 15 years using a Loan Against Property EMI Calculator.
Attractive Interest Rates: When you borrow a LAP, the lender receives your property as collateral. They can seize your assets if you default to recover their outstanding balance. The lower risk involved with these loans makes them available at attractive interest rates.
High LTV Ratio: The Loan-to-Value (LTV) Ratio can reach up to 75% of your property's value, providing you with sufficient funds to achieve your objectives.
A micro Loan Against Property is an excellent funding option if you need a loan and own a valuable property. Use the asset as collateral against the loan and receive ample funding against it. You can apply for a LAP for the following purposes:
To meet your business’s working capital needs
To expand your business
To send your child abroad for higher education
To meet an immediate financial crisis like an urgent home repair or medical emergency
To meet wedding expenses
Eligibility Criteria
At Hero FinCorp, the Loan Against Property is available to entrepreneurs or self-employed individuals only. The eligibility requirements to apply for a micro LAP include:
Age: 25 to 75 years
Citizenship: Only Indian nationals
Occupation Status: Must be running a profitable business for at least three years
Monthly Income: No predefined monthly income requirement for a Loan Against Property
Business Existence Proof: UDHYAM Certificate, GST Certificate, Certificate of Practice, Trade License, Partnership Deed Copy
Signature Proof: PAN Card, Passport, Banker’s Verification
Income Proof: Last three years' Income Tax Returns (ITRs), Profit and Loss Statement, Balance Sheet, Income Statement, previous six months Bank Account Statement
Property Related Documents: Complete set of documents related to the property you are serving as collateral
Rates and Charges
Here’s a look at the applicable rates and charges for a micro LAP. Be ready to pay them when applying for a Loan Against Property:
Impact of Credit Score on Micro Loan Against Property Approval
A credit score is a crucial factor that affects your loan eligibility. However, despite low scores, lenders feel safer when approving secured loans due to the minimal risk involved. Let's look at the impact of credit score on micro LAP approval:
Ample loan amount
Higher LTV ratio
Easier and faster approval
Minimal formalities and documentation requirements
Lower interest rates
Easier repayment terms
Steps to Apply for a Micro Loan Against Property and Improve Approval Chances
Follow these steps to apply for a micro LAP at Hero FinCorp:
Step 4-Fill out the LAP application form online and click ‘Apply Now’.
You can also call customer care at 1800-103-5271 (Mon-Fri, 10 am - 6 pm) or email Corporate.Care@HeroFinCorp.com. Alternatively, you can visit your nearest Hero FinCorp branch or contact your relationship manager if you're an existing customer.
Adding a co-applicant, choosing a longer repayment tenure, mentioning your alternative income sources, and improving your credit history are some steps to improve your approval chances.
When you need funds, consider a Micro Loan Against Property to unlock the value of your assets rather than depleting your hard-earned savings. Hero FinCorp offers secured loans to cover various needs of self-employed applicants. Use a Loan Against Property EMI Calculator to choose a suitable repayment term and manage your loan responsibly.
Frequently Asked Questions (FAQs)
How does a Micro LAP differ from a regular Loan Against Property?
A Micro LAP has a smaller loan amount than a Loan Against Property. It is more suitable for covering a short-term financial need.
Can I use the funds from a Micro LAP for any purpose?
Yes, you can use a Micro LAP for various purposes, including debt consolidation, lease rent discounting, and other commercial and business purposes.
Can I prepay or foreclose a Micro Loan Against Property?
Prepayment and foreclosure options depend on whether your loan has a floating or fixed interest rate. Before applying for a loan against property, review the predefined charges and loan terms in your agreement carefully.
How is the loan amount determined for a Micro Loan Against Property?
The loan amount is based on the value of your property and your eligibility.
Katyaini is a finance expert with a focus on the non-banking financial sector, bringing over 8 years of experience in NBFC. She specializes in simplifying complex financial concepts for readers, helping them navigate the NBFC landscape. Outside of work, she is passionate about travelling.
