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Insure the Dreams of you and your Family with LAP

Personal loans are a risk, but they can be rewarding too if you opt for loan against property

With Loan against property, all you need to do is mort6rage something of value and get the best loans with the best interest prices.

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Loan Against Property

Loan Against Property in India

Loan against property is a version of personal loan. This variant of personal loan is easy to access, has a reasonable interest rate. However, in order to get LAP (Loan against property), you need to put forward your property as collateral. Once you do that, the bank or the NBFC will provide you with 60-70% of the current market value of that property s loan. 

Putting your property as collateral doesn’t mean that you are not allowed to use it however, you will have to be good on your promise of repayment after a certain period of time. Otherwise, the bank is fully in their rights to take that property from you. There is no need to worry if you are good on your promise and the collateral will be removed after your complete repayment.

You would think that the case of collateral behind these loans might make people apprehensive about getting this type of loan. However, it is considered to be one of the most favoured forms of loan in India. It is favourable in this nation for the following reasons: 

  1. It can be applied for child’s marriage. 
  2. For expanding a business
  3. For funding medical treatments
  4. For funding higher studies. 
  5. For vacation purposes. 

Benefits of Loan Against Property

LAP is considered the most favoured form of personal loans for the following reasons: 

  1. The interest rate is surprisingly low: The main part of the LPA is collateral. Now collateral is a form of assurance to the bank that loan will be repaid after the given tenure. To that end, the bank also provides an olive branch by lowering the interest rates on LPA. The range of LPA lies between 12-15 percent as compared to the high rates of personal loans which are almost always around 15-25%. 
  2. Close to no charges when it comes to prepayments: If you want the close the LPA by prepaying to the bank, you would not have to bear the charges for the prepayments. While it is not true for all the banks, you can expect the prepayment charges to be lower. 
  3. Getting access to this loan is easy: getting access to this particular type of loan involves a lot less hassle than the others. It is mostly because most companies are pretty forward in providing LPA. 
  4. The payback period is longer: Personal loans tend to have a smaller payback period. However, LPA is an exception with about 15 years given to pay-back the loan rather than the 7 years of the generic personal loans. 
  5. You have to pay lower EMI: When it comes to LPA, the EMI is kept on the lower side. It is mostly because of the higher period of time it requires to pay back the loan.  
     

Eligibility Criteria for Loan Against Property

The eligibility criteria of getting access to Loan against Property are the following: 

  1. Firstly, the property you are planning to put forward as collateral should have no outstanding disputes associated with it. 
  2. You should be of Indian nationality. 
  3. You should at least 21 years of age to fill the loan application. (this age factor may vary from bank to bank)
  4. If you are a salaried employee, you have to have the salary of 25000 per month to get access to LAP. 
  5. If you are a self employed individual, your annual income should be INR 5, 00,000. 
  6. The lender will be getting a background check on you. Therefore, make sure that your credit score for the loan is good with other banking institutions. 

The above are the eligibility criteria. However, if you want to score a good EMI rate, there is a pro tip for you, make sure that you are good on your credit for that loan.

Required Documents for Loan Against Property

  • If you are a salary man: 
    • You need an Identity proof which can be an Aadhar card, Voter ID card, Driver License etc. 
    • You will need the salary slip for the past 3 months. 
    • A form-16 issues by your employer(current)
    • Bank statement for the last 6 months. 
    • A cheque that covers the cost of administration and processing to the bank that is going to process your loan. 
  • If you are a businessman(self-employed)
    • You need an Identity proof which can be an Aadhar card, Voter ID card, Driver License etc. 
    • Credentials related to your education. This entails certificates, degrees, diplomas etc. 
    • Income tax returns for the past three years.
    • Bank statement for the last 6 months. 
  • If you are a self-employed professional:
    • You need an Identity proof which can be an Aadhar card, Voter ID card, Driver License etc. 
    • Credentials related to your education. This entails certificates, degrees, diplomas etc. 
    • Registration and licensing certificates related to your profession. 
    • Existent of your business profile. 
    • Balance sheets of the past 3 years including the profit and loss statement of the company. 
    • Bank statement for the last 6 months. 
    • IT statements (acknowledged) of the past three years. 
       

FAQs

LAP is a form of personal loan that provides a long tenure, low interest rate, and easy availability. Therefore, if you are looking for an all purpose loan, you should opt for Loan against Property. Furthermore, this loan can be availed for any sort of legal purpose.

Collateral is the foundation that LPA is built upon. Seeing that the amount of loan that will be granted to your will be around 60 to 70 percent of the property that you have given as collateral. However, this is not the only factor of the loan about that a bank can grant to you. Your education, your earnings, your age, qualifications also dictate the amount that you can get via this loan.

Following are the property types that can be considered as collateral to avail Loan against Property:

  1. A residential property that you own '
  2. A residential property that you currently own and occupy.
  3. A residential property that you own but have rented.
  4. A piece of land that you own.
  5. A commercial property that you own.
  6. A commercial property that you own but have rented.

Prepayment is a special concept when it comes to LAP. If you happen to prepay your entire loan amount before the tenured time, chances are that you won’t have to bear any charges. However, the policies regarding prepayments differ from bank to bank. Therefore, it is expected that their might at least some nominal charges.

Yes, you can get Loan against property. All you need to do is put forward the following documents.

  • Identity proof which can be an Aadhar card, Voter ID card, Driver License etc.
  • Credentials related to your education. This entails certificates, degrees, diplomas etc.
  • Registration and licensing certificates related to your profession.
  • Existent of your business profile.
  • Balance sheets of the past 3 years including the profit and loss statement of the company.
  • Bank statement for the last 6 months.
  • IT statements (acknowledged) of the past three years.

LAP has a pretty long repayment period. This period is of 15 years which is comparatively twice the time of other variants of personal loans, which is mostly of 7 years.

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