Loan Against Property

Loan against Property (LAP/Mortgage Loan), lets consumers to raise funds by leveraging their residential, commercial, industrial properties. Like unsecured personal loans, this loan can also be availed for meeting both personal and business needs. Banks and HFCs offer loan against property starting at low interest rates for tenures of up to 20 years. The loan amount for LAP can go up to 70% of the property’s market value, depending on the lender and the credit profile of the borrowers. Many lenders also offer Lease Rental Discounting (LRD) facility, which allows consumers to avail loan by pledging the rental receipts of their tenants.

• Hospitals
• Hotels
• Industrial Property like factory, Workshops etc
• Commercial Property like Shopping Complex, Malls etc
• Residential Property like Row Houses, Flats etc
• Private School & Professional College Buildings

• A Secured Loan, it is offered only when the individual/applicant keeps the property with the bank as security. The loan interest rates are allocated based on the individual’s monthly salary, amount taken as loan, interest rates etc. Rate of interest of loans are again based on the customer’s profile (salary, credit history etc).
• Repayment periods are usually upto 20 Years and hence are long-tenure loans.
• The customer/applicant is also responsible for payment of charges towards administrative procedures while processing the application, along with the processing fee.

What purpose can one use loan against property funds for?

• Funding business and working capital needs of individuals, partnerships, private companies and SME's
• To purchase new property by pledging existing property
• As lower cost alternative to personal use and uses such as marriages, education, vacation, home renovation, medical emergency

The eligibility for Loan against property is determined by various factors including income, employment status, loan tenure and so on, and remains almost the same for professionals, self-employed professionals and businessmen.

• Any Indian citizen in good standing who is salaried, self-employed or business person with regular source of income can apply for a home loan.
• The applicant should be above the age of 24 years.
• Should be currently employed with existing organization or been involved in your business for a specific number of years
• Professional stability and savings history play a major role in approval of the loan, especially minimum required monthly salary and repaying capacity
• Bad credit history would prove to be a put-off, especially anytime within 3 months prior to applying for home loan. Hence, should have submitted EMIs for other loans on time, for the said amount of period.

• As loan against property is secured against property, banks offer lower rate of interest compared to unsecured business loans or personal loans
• Loan tenure can be up to 20 years leading to lower EMI compared to unsecured loans where loan tenure can only be up to 5 years
• Loan tenure can be up to 20 years leading to lower EMI compared to unsecured loans where loan tenure can only be up to 5 years
• Loan can be taken in name of company/ firm even if the property is owned in individual name of partners/ directors