A Lal Dora property is a plot located in particular residential areas, where construction norms and laws set by the municipality and development authority are not applicable.

What Is Lal Dora?

Lal Dora translates to “red thread”. The term originated back in 1908 during the British Raj in Delhi. During this time, non-agricultural lands in villages were demarcated with a red thread for identification.

The Lal Dora areas continue to exist as of date. In 1963, a mandate passed stated that no permission would be required to construct a Lal Dora property.

Currently, there are more than 350 villages in Delhi classified as Lal Dora. The costs of properties in these areas are comparatively cheaper compared to other locations. It is worth noting that there are certain high-end and posh areas of Delhi of today that too fall under this tag as per the ’63 mandate.

Highlights Of Lal Dora Properties –

• Total villages – More than 350.
• 100% property tax exemption – Houses with a floor area of up to 200 sq. m.
• Redevelopment of apartments – Plots measuring more than 1,500 sq. ft.

However, lenders may be hesitant to sanction a loan against the property if the asset is in the Lal Dora area.

How To Avail A Loan Against Lal Dora Property?

Follow these tips to secure such loans easily –

1. Make Sure To Avail A Valid Lal Dora Certificate

A Lal Dora certificate is issued against a property or plot located in areas earmarked as such. The document certifies that you are the proper owner of the asset. You can avail of Lal Dora certification from the tehsil office by submitting a few documents like an application form, affidavit, Raksha share, etc.

• Apply For The Loan

Compare all the available options along with interest rates, tenors, and other features to pick the right lender for your loan. Lenders will ask you to present a Lal Dora certificate when you apply for a loan against property.

• Improve Your Credit Score

Usually, secured loans don’t require applicants to hold a high credit score. However, having the same can help you secure a loan against property more comfortably. Your chances to avail of these loans increase if your CIBIL score is 750 or above.

Your credit score affects your loan against property eligibility in more than one way. Hence, make sure to improve before you apply for financing.

• Opt For A Lower Amount

Usually, lenders offer finance up to 90% if the property value is less than Rs. 30 Lakh. The loan to value can go up to 80% if the amount asked for is more than the one mentioned.

Asking for a lower amount will make you more eligible for a secured loan against your Lal Dora property. It will lower the risk of the lender associated with the loan; hence, you may be able to avail of the loan without any hassle.

• Approach NBFCs

NBFCs have less stringent terms and conditions for loans against property as compared to commercial public and private financial institutions. Approaching such companies can help you receive loan approval against your Lal Dora land property.

NBFCs like Bajaj Finserv provide Loans Against Property with minimal documents and a few eligibility criteria.

They also provide pre-approved offers that lower the time required to avail of financing by making the process easier and quicker. Pre-approved offers are valid on home loans, business loans, personal loans, and a host of other financial products. Take a look at your pre-approved offer by providing only your name and phone number.

• Have All The Necessary Documents

Secured loans are usually secured against the following documents –

• Property documents.
• Aadhaar or PAN.
• Proof of address – Latest electricity or any other utility bill, life insurance policy, any identity proof with the permanent address, etc.
• Income tax returns.
• Bank account statements – 3 months for salaried and 6 months for self-employed applicants.

Lenders may ask for additional documents when you apply for a loan against your Lal Dora property. Hence, make sure to check the complete list of documents needed before you approach a lender.

Tips To Consider Before You Avail The Loan – 

1. Show A High Account Balance – An account balance that is at least equal to two EMIs can increase your chances you to avail a loan against property.
2. Have A Clear Occupational History – Showing sound employed or self-employed history will also make you more eligible for the loan.
3. Disclose All Your Sources Of Income – Disclosing all your sources of income (if you have more than one) will help you to receive approval of your loan application more easily.