Take Loan against Property (LAP)

Gives you access to immediate funds

Available for salaried and self employed

*
Benefits of LAP

- Low EMIs

- Immediate Funds availability

- Fast and easy Loan Processing

- Speedy Approvals

- Flexible Tenure

- Simple and Hassle free Documentation

- Easy Balance Transferring

Loan Against Property

Interest rates as low as 8.60%

Please enter required loan amount Digits Only
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Loan Against Property
3.8 / 5 (4 Reviews)

Loan against Property(LAP) is one of the variants of the Personal loan, Laps are secured loans offered by banks and financial institutions using one or more properties owned by you as collateral. One can avail these mortgage loans against commercial property and residential property collaterals. In a LAP the property is mortgaged and a fixed percentage of the prevailing market value of the property (normally between 60-70% of the value of the property) is given to the borrower as a loan. Though such a property is mortgaged to the lender, you are still allowed to continue using it for residential or commercial purposes.

These loans are a better option as compared to personal loans due to their comparatively lower rate of interest. Additionally, unlike gold loans, where the gold ornaments are deposited with the bank and you do not get them back until the loan is paid in full, you can continue using the collateral property in a LAP while you are repaying the loan.

Loans against property are a highly preferred form of loans in India, and are much more easily available with the surge in banks and NBFCs providing such loans. Along with being cost-effective, these loans are reasonably convenient to avail and repay due to the relatively low Loans against Property interest rate.

 

You can submit mortgage loan application for following purposes:

  • Expanding your business
  • For your child’s marriage
  • Funding medical treatments
  • For your child’s higher studies
  • Funding your dream vacation


Features of Loan against Property (Mortgage Loan)

  • In case of a loan against property, financial institutions offer higher loan amount for longer tenure and at attractive interest rates as compared to other loan plans.
  • Quick and hassle free process of Loan against property with speedy approvals
  • Residential and commercial properties are accepted as collateral to get loans against property.
  • Mortgage Loans are an excellent debt consolidation tool.
Mortgage Loan

Some of the several reasons for you to apply loan against property are:

Loan against property is a secured loan which means it is offered only when you offer a property owned by you as security with the bank. Personal loan interest rate is allocated according to the customer's salary, the amount being borrowed and other criteria as specified by the bank.

  • Laps are usually long-term loans and repayment periods can be anything between 10 years and 15 years.
  • The amount you can borrow ranges from Rs. 300,000 to Rs. 1 Crore (lower amounts may also be available).
  • The rate of interest for the loan varies on a case by case basis depending on the type of property and other factors specified by the lender.
  • Banks also bill the applicant for the administrative charges incurred when processing the application such as property valuation and its processing fee.

For salaried individuals, and for professionals and businessmen who are self-employed, the loan against property eligibility requirement in banks or for other institutions is pretty similar.

The Usual eligibility criteria to avail Loan against property are:

  • You must be an Indian national
  • You should be at least 21 years at the time of submission of the loan application
  • You must have been employed by the current organization or should be involved in the current business for a specific number of years
  • You must  earn the minimum required salary as well as have the minimum monthly repaying capacity
  • You should have a good credit history with proven track record of timely loan EMI and credit card bill repayment. This factor may help you secure a lower interest rate and reduce loan application processing time too.

Depending on whether you are salaried, or a self-employed professional, or a self-employed businessman, different banks ask for different set of Loan against Property documents.

The usual documents required for loan against property are as follows:

Depending on whether you are salaried, or a self-employed professional, or a self-employed businessman, banks ask for different set of Loan against Property documents.

The documents required for loan against property are as follow:


For salaried individuals:

  • Proof of identity and residence proof such as Aadhaar Card, Voter ID Card
  • Salary slips of past 3 months
  • Form-16 issued by current employer
  • Bank statements of salary account for the previous six months
  • A cheque covering the administrative costs/processing fees incurred by the bank in processing the application


For Self-employed Businesspersons:

  • Proof of identity and residence proof
  • Educational qualification certificates, degrees, diplomas, and other academic credentials
  • IT Returns of the three years preceding the one in which loan is applied for
  • Bank statements of six months preceding the one in which loan is applied for


For Self-employed Professionals:

  • Identity and Address proof documentation
  • Certificates that prove your academic qualifications/credentials
  • All registration/licensing certificate pertaining to your profession
  • Business existence proof/business profile details
  • Previous 3 years’ balance sheets as well as Profit & Loss Statement of the company.
  • Acknowledged Income Tax statements of the company and self for previous 3 years
  • Last 6 months’ bank statement.

Loan against property is a secured loan i.e. the bank keeps the property documents as collateral during the term of the loan. Due to the reduced risk perceived by the bank in case of LAP, the interest rates on offer in LAP are quite low and usually close to the base rate.

Different banks offer Loans against property with options of fixed interest rate and floating interest rate to applicants to choose from.

Fixed Interest Rate: The interest rate of a fixed rate loan against property remains the same throughout the loan’s tenure. However different financial institutions levy different interest rates for  Fixed-rate Loans against property.   

Floating Rate: Floating or adjustable interest rate is not fixed. This type of interest rate varies according to prevailing market conditions

 

Difference between Loan against Property and Personal Loan:

  • Personal loan is an unsecured loan whereas Loan against property is a secured loan.
  • For personal loan, an individual can take a loan for personal use without any security or guarantor; however, for loan against property, an individual has to mortgage the residential or commercial property.
  • Rate of interest for LAP or Mortgage loan is comparatively much lower than Personal loans.
  • Equated Monthly Instalments (EMIs) for LAP are cheaper; whereas for Personal Loans, an individual has to pay higher EMIs.
  • The sanctioned loan amount for LAP depends upon the value of the property and in case of personal loan; an individual’s income defines the amount of sanctioned loan amount.
  • Loan tenure of mortgage loans is higher as compared to loan tenure of Personal Loans. For LAP, a person usually gets a loan for a maximum of 180 months (15 years) and for Personal Loan, an individual usually gets a loan for 60 months (5 years).
  • Loan against property is an ideal way to employ an idle property to raise required capital rather than resorting to high interest personal loans

Paisabazaar’s vast collection of data base allows you to compare loan against property from various banks and financial institutions that offer loan against property in India. It is advisable to check the eligibility criteria before you apply for loan against property because banks follow strict rules when lending money. Which is why, PaisaBazaar's loan against property eligibility calculator is a handy tool that generates easy-to-understand comparison results that take into account differences in T&C (of different banks) and also the fine-print.

The eligibility calculator informs you:

1) Whether you are eligible for Loan against property

2) How much money you can borrow against your property and

3) The terms and conditions of repayment, including interest payoffs and value of each EMI based on the loan tenure.

We suggest you use the calculator to decide which loan option among those available best suits your needs.

There are typically 2 ways to calculate EMI for loan against property

1: By using the ages old, time consuming, error prone formula i.e. EMI = [P x R (1+R) N]/ [(1+R) N-1]

2: By using Paisa Bazaar’s time saving, simple to use, & reliable EMI calculator

In order to help you determine the loan repayment EMI ahead of time, we have provided our loan against property EMI Calculator. The calculator provides you with the EMI amount you would be required to pay based on criteria such as loan principal, tenure and interest rate provided by you.

Q. Can I use the money obtained from Loan against property for business activities?
Ans. Yes. You can use the loan obtained by mortgaging your property for business activities as well as for any personal financial distress you might be facing. However, you are not allowed to use the money for any illegal or speculative activities.

Q: Who is eligible for Loan against Property?
Ans: The Loan against property eligibility criteria vary from one bank to another. However, the common factors that all banks consider are:

  • Your income, savings, debt obligations
  • Cost/value of the property mortgaged
  • Your repayment track record for other loans, credit cards

Q. Do I need a co-applicant for this loan?
Ans. A co-applicant for loan against property is mandatory only when the property being mortgaged is owned by more than one person. In such as case, all co-owners of the property mandatorily become co-applicants.

Q: What do you mean by the market value of a property?
Ans: The market value of a property is the estimated value in terms of money that a property can raise if it is sold at prevailing conditions.

Q: What types of properties are accepted by lenders providing Loan against property?
Ans: Lenders accept various types of property they can be residential (rented out and self-occupied) or commercial use properties. A plot of land without any construction can also be considered as appropriate collateral by the prospective lender.

Q. Are only residential properties eligible for loan against property?
Ans. No, you can avail a Loan against mortgage of residential/ commercial property owned by you.

Q: For how long can I take a loan against property and what interest rate will I be charged?
Ans: The tenure of a loan against property usually can be as long as 15 years, with interest rates typically ranging from 12% to 15.75%. The exact tenure and interest rate on your loan may vary to a certain extent from one lender to another.

Q: Can NRIs avail loans against property?
Ans: Yes, several financial institutes offer loans against property to NRIs, subject to verification of all documents.

Q: Do banks accept uninsured property to sanction loan against property?
Ans: No, in most cases, banks require the property to be insured before approving a loan.

Q: Can I prepay my loan against property?
Ans: Yes, you can prepay the loan taken against property; however, you would have to abide by certain terms & conditions levied on prepayment of loan by the particular bank.

Read more LAP FAQs....

Loan Against Property
3.8 / 5 (4 Reviews)

Loan Against Property

PaisabazaarLoan Against Property
4/5

Satisfactory

This website was very helpful. I gained good knowledge about loan against property schemes. I could research on what other banks are also providing. This helped me select my loan scheme and plan better. I have applied for a SBI loan against property and my loan got approved. Hope to receive my ..Read more...


Posted on: Jan 20 , 2017
PaisabazaarLoan Against Property
4/5

2 minutes and I could apply for my LAP

This website is worth giving a visit. Their interface is really good and the application process is really smooth for any scheme. I applied for a HDFC loan against property in just 2 minutes at 12% interest rate only. Very nice and Very convenient process!!


Posted on: Dec 23 , 2016
PaisabazaarLoan Against Property
4/5

Very good quality services

Every time I have transacted through Paisabazaar, it has not taken more than a few minutes. Their document verification is also really fast and they need only the scanned copies of all the documents. I applied for my PNB housing loan against property scheme at 13% interest rate only.


Posted on: Dec 23 , 2016
PaisabazaarLoan Against Property
3/5

Easy to apply

The interest rates for Loan against Property are easily comparable and I could choose the best loan against property without any hassle. Their documentation process is really easy and quick. Very good services!!


Posted on: Dec 23 , 2016