Loan Against Properties

The term "loan against property" (LAP) refers to a secured loan given by banks, housing finance organisations, and non-bank financial institutions (NBFIs) against real estate, whether it be residential or commercial.

What is a Loan Against Property (LAP)?

A loan against property (LAP) is a secured loan provided by banks, housing finance companies, and non-banking financial institutions (NBFCs) against residential or commercial real estate. Compared to personal loans or business loans, a property loan typically comes with lower interest rates and quicker disbursal.

This type of secured loan is available to salaried individuals, self-employed professionals, and business owners who own residential or commercial properties. The sanctioned loan amount in a loan against property is generally higher than other available loan options.

Lenders generally sanction between 50% and 60% of the property's market value. Private lenders may offer up to 80% of the property’s value. Since the property is used as collateral, the LAP is classified as a secured loan.

Why Do People Apply for a Loan Against Property?

A loan against property can be used for multiple personal and business purposes, such as:

  1. Paying children's school or college fees
  2. Handling medical emergencies
  3. Financing weddings
  4. Funding a vacation
  5. Purchasing or upgrading business equipment

Features and Benefits of Loan Against Property

  1. Low Interest Rates: Being a secured loan, a loan against property offers lower interest rates than unsecured loans. A good credit score improves eligibility.
  2. Simple Documentation: Since real estate is collateral, the document verification process is quicker and easier.
  3. Flexible Repayment Tenure: Depending on the lender, repayment periods can go up to 20 years, offering comfort and flexibility.
  4. Ownership Retained: The borrower retains ownership of the property while it is mortgaged.
  5. Pre-Closure Option: LAPs can be prepaid before the end of the term. No pre-closure charges on floating interest rates; minimal fees on fixed-rate loans.
  6. Maximum Property Utilization: You can get substantial funding against your asset while still retaining ownership and avoiding sale.

Eligibility Criteria for Loan Against Property

Self-Employed Professionals & Non-Professionals

  1. Minimum annual income: INR 1.80 lakhs
  2. Age: 21 years at application, maximum 65 years at loan maturity
  3. Minimum of 3 years of business existence
  4. Consistent income generation for at least 2 years

Salaried Individuals

  1. Minimum monthly salary: INR 40,000
  2. Age limit: 18 to 60 years
  3. Must be an Indian citizen
  4. Graduation is mandatory for private company employees; not required for public sector or government jobs

Documents Required for Loan Against Property

  1. Identity Proof: PAN card, Aadhaar card, Voter ID
  2. Address Proof: Passport, Aadhaar card, Voter ID, landline bill, rental agreement, driver’s license
  3. Income Proof (Salaried): ITR, bank statements
  4. Income Proof (Self-Employed): Last 3 years' audited balance sheets, profit & loss accounts, ITRs certified by a CA
  5. Property Documents: Registered Sale Deed, Lease Deed, Chain of Sale Deeds, Latest House Tax Return, Approved Building Plan
  6. Business Address Proof: Lease agreements, ownership documents, or utility bills

How to Apply for Loan Against Property

  1. Visit the official website and navigate to the product page.
  2. Select "Loan Against Property".
  3. Fill in your personal and property details accurately.
  4. Enter a valid email and mobile number for communication.
  5. Read and agree to the "Terms and Conditions" before submitting the form.
  6. A representative will contact you once your application is processed.

EMI Calculator

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