Frequently Asked Questions - Loan Against Property
Loan Against Property - Frequently Asked Questions
Find answers to all your queries related to LAP Loan ranging from application procedure to eligibility criteria, interest rates, and documents required.
What is the minimum and maximum amount one can get for a Loan against Property?
The loan amount granted for LAP would depend on the type and value of the property being pledged. However, in general, most lenders provide LAP for amounts ranging from a few lakhs to 2 or 3 crores.
What are the criteria for sanctioning LAP?
Some of the factors considered by lenders for sanctioning LAP are:
- The market value of the property being pledged
- Relevant approvals and title deeds of the property
- Age of the property
- Applicant’s legal ownership of the property
- Age of the applicant
- Number of dependents
- Other debts and liabilities of the applicant
- Applicant’s CIBIL score and credit history
- Financial strength of the applicant, income and repayment capability
How do I calculate EMI for LAP?
As with any other type of loan, most lenders provide an online EMI calculator on their website, which allows you to calculate the monthly payment applicable for Loan against Property. To manually calculate the EMI, apply the following mathematical formula:
EMI = [P x R (1+R) N]/ [(1+R) N-1]
Where P is the principal amount, or the total amount of loan availed, R is the rate of interest on the loan, and N is the tenure of the loan represented in months.
Can I get a Loan against Property even if I have other existing loans?
Yes. You can avail of LAP even if you have other existing loans provided you meet all other eligibility criteria of income, age, employment, credit score etc.
How would the value of my property be assessed?
The lender conducts a formal evaluation, wherein an appraiser approved by the lender, visits your property to assess it and determine its market value.
Do I have to specify the purpose of taking LAP to the lender?
Since LAP is a multi-purpose loan, most lenders do not require you to specify the purpose of the loan up to a certain amount. However, if the amount borrowed is beyond a particular limit, you may be asked to sign a declaration that the funds are not being used for any speculative or illegal purposes.
What are the fees and charges for Loan against Property?
In general, most lenders charge a processing fee of 0.5-1% for loan against Property. Besides this, there is usually a mortgage origination fee of ₹ 5000. In the event of a foreclosure, charges are applicable at 4%, and for prepayment, 2%-2.5% is charged. Besides these, cheque bounce charges, or charges for late payment of EMI may be applicable, and these charges vary from one lender to another.
Are interest rates for LAP different than those of Personal Loan?
Yes, interest rates of LAP are lower than those on personal loans because LAP is a type of secured loan, which means lower risk to the lender.
What are the factors determining the rate of interest for a Loan against Property?
Four important factors that determine the interest rate offered by the lender for Loan against Property are:
- Non-fulfillment of one or more of the eligibility criteria
- Unstable employment
- Insufficient income or excessive other debts and liabilities
- Poor credit score or unsatisfactory credit history
- Absence of required government approvals
- Low property value