Loan Against Property (LAP)
A Loan Against Property (LAP) is a secured personal loan that allows you to borrow a substantial sum of money by pledging your property as collateral. This type of loan is also referred to as a mortgage loan.
Loan Against Property interest rates typically range from 8.50% to 18% per year. You can borrow up to ₹25 crore for a term of up to 20 years.
Loan Against Property (LAP) Features :
- Secured Loan : The loan is secured against the value of your property. The property acts as collateral, reducing the risk for the lender. This generally leads to lower interest rates compared to unsecured loans.
- Loan Amount: The loan amount is determined based on the value of the property you pledge. Generally, you can get a higher loan amount compared to personal loans or other unsecured loans.
- Flexible Tenure : The tenure (repayment period) for a Loan Against Property is usually longer compared to other types of loans, often ranging from 5 to 20 years. This allows for lower monthly installments.
- Multipurpose : The loan amount can be used for a wide range of purposes, giving you the flexibility to address various financial needs without any restrictions.
- Improves Credit Scores : Successfully repaying a Loan Against Property can positively impact your credit score, as it demonstrates responsible borrowing behavior.
Loan Against Property (LAP) Eligibility and Documents :
Read on to know the criteria required to apply for our Loan Against Property (LAP).
Loan Against Property (LAP) Eligibility Criteria :
- Nationality: You need to be a Citizen of India with documents to prove your claim.
- Occupation and Income: Your lender will require you to furnish details regarding your occupation and income to prove your professional and financial stability to determine your creditworthiness.
- Credit History: Your three-digit Credit Score, indicative of your track record in respect of repayment of loans, and other forms of credit will be a deciding factor to prove your eligibility for a LAP.
- Banking Relationship : Should you have a healthy relationship with your lender, you will not be disapproved for a LAP. Additionally, your lender will offer you better terms and conditions in respect of loan value, interest rates, period of the loan, hidden charges, and processing fees.
- Market Value of Property : Your lender retains the right to decide the loan amount and terms and conditions of your mortgage loan based on the market value of your collateral property. Besides, the market value of the mortgaged property must be higher than the loan amount calculated on the current value of your property.
- Title of Property: Your lender will require you to be the current existent owner of the property, and in case of a co-application, you will require to prove multiple ownership clear title. Besides, the property must not be mortgaged with any other financial institution.
Documents Required to Apply for Loan Against Property :
- Proof of identity/residence
- Proof of income
- Property-related documents
- Proof of Business (for self-employed)
- Account statement for the last 6 months
Fees and Charges for Loan Against Property Loan :
The fees and charges of property loans usually vary from lender to lender and from case to case. The aforementioned table will give you a fair idea of the fees and charges related to property loans:
- Loan Processing Fees : 0.25% to 2% of Loan Amount
- Loan Cancellation : Nill – 5% (according to Bank/NBFC)
- Stamp Duty Charges :As per the Value of the Property and State Tax
- Legal Fees : As per actuals
- Penal Charges : Usually 2% per month
- EMI / Cheque Bonus : Approx 500/-
Loan Against Property FAQs
- What can I use a Loan Against Property for? A Loan Against Property (LAP) allows you to borrow money by pledging your property as collateral. You can use the loan amount for various purposes, including business expansion, debt consolidation, home renovation, education expenses, medical bills, wedding expenses, travel, and other personal or business needs. The specific usage of the loan amount can vary depending on the lender and the terms of the loan agreement.
- How much loan can I get against my property? The amount of loan you can get against your property depends on several factors, including the value of the property, your income, repayment capacity, and the lender’s policies. Typically, lenders offer loans ranging from 60% to 80% of the property’s market value. However, some lenders may offer higher loan amounts, especially for residential properties. It’s advisable to check with the lender to understand the maximum loan amount you can qualify for based on your property’s value and your financial situation.
- What are the interest rates for LAP? The interest rate for Loan Against Property usually starts from 9.00% p.a and ranges anywhere between 9.00%p.a and 13-15% p.a
- Can I still use my property if it’s mortgaged for LAP? Yes, you can continue to use your property even if it is mortgaged for a Loan Against Property (LAP). The property remains in your possession and can be used for residential or commercial purposes as before. However, you must ensure timely repayment of the loan to avoid any risk of losing the property due to default.
- What is a Loan Against Property Overdraft (LAP OD)?A Loan Against Property Overdraft (LAP OD) is a type of loan facility that allows you to withdraw funds from your LAP account up to a specified limit. Similar to a credit card or a line of credit, you can withdraw and repay funds multiple times, as long as you stay within the approved limit.With LAP OD, you only pay interest on the amount you withdraw, not on the entire approved limit. This can provide flexibility in managing your finances, as you can use the funds as needed and repay them at your convenience. However, interest rates for LAP OD are typically higher than regular LAP loans, so it’s important to use this facility judiciously.