Compare & Apply for Loan Against Property

Loan Against Property for Your Financial Needs

Loan Against Property (LAP) is a type of secured loan provided against the security of a property legally owned by the applicant. This property can be either residential or commercial, and its market value determines the potential loan amount that will be granted to the borrower. From a cost perspective, these loans can be a better option as compared to a personal loan due to the comparatively lower rate of interest charged by the lenders.

Along with being cost-effective, these loans are reasonably convenient to avail and repay due to the relatively low interest rates. Bridge the gap between your dreams and financial need by applying for Loan Against Property with FinMarket.in.

Types of Loans against Property

Based on the type of property pledged, Loans against Property can be classified as:

• Loans against self-occupied residential property
• Loans against vacant residential property
• Loans against rented residential property
• Loans against self-occupied commercial property
• Loans against vacant commercial property
• Loans against rented commercial property
• Loans against residential plot
• Loans against industrial property

Loan against property is a multi-purpose loan which can be used for a variety of financial needs such as medical expenses, travel, wedding expenses, higher education for children, business expansion, home improvement, and more. Typically lenders are willing to offer 50%- 60% of the value of the property as a loan. However, depending on the type of property, the funding ratio may vary:

For residential, self-occupied property, the funding percentage is usually 65%. If the residential property is rented, then 60% of the property value can be availed. Similarly, for commercial, self-occupied property, 55% is the funding ratio and for commercial properties that are let out for rent, lenders will typically advance 50%. Funding against residential plots is normally 60% of value, whereas for commercial plots the funding is approximately 50% of value. Remember, LAP is not granted for purposes such as gambling, speculative business investments, stock market investment, or other similar purposes.

What kind of property is considered for Loan against Property?

Any registered property with the proper sanctions from the appropriate town planning authority is considered suitable for LAP. General Power of Attorney (GPA) holders of a property cannot apply for LAP, because a power of attorney is not the same as legal ownership. Therefore, lenders do not give loans to GPA holders. Similarly, most lenders do not grant LAP for agricultural lands because these lands are solely meant for agricultural purposes. Here’s a list of properties for which LAP is usually granted:

• Residential properties owned by applicant
• Residential properties owned as well as occupied by applicant
• Residential properties owned by applicant but let out for rent
• Piece of land owned by applicant
• Commercial property owned by applicant
• Commercial property owned by applicant but let out for rent

Loan Against Property Explained

Multi-purpose Loan

The funds obtained from LAP can be used for a variety of purposes ranging from wedding or vacation to business expansion or medical expenses. The property pledged as collateral is evaluated by a property appraiser approved by the prospective lender.

Loan Range

LAP is most suitable when the amount of loan required is very high. This type of loan ranges in size from 2-3 Lakhs up to 2-3 Crores. The actual loan amount depends on various criteria meant to measure your repayment capacity such as income, age, qualification, number of dependents, spouse’s income and credit history. The amount of loan that can be availed also depends on the value of the pledged property. Usually up to 40%-60% of the property value is granted as loan.

Fast-track approval process

Quick and hassle free process of Loan against Property with speedy approvals. The property documents remain with the lender as security until the loan principal and interest are completely paid off.

Secured Long-term Loans

In the case of a Loan Against Property, financial institutions offer higher loan amounts available for longer tenures and at attractive rates. A Loan Against Property also has a smaller EMI as compared to other loans.

Floating Interest rates

A floating or adjustable interest rate is not fixed and this type of interest rate varies according to interest rates in the prevailing rate market.

Eligibility Criteria

The acceptable age range for borrowers starts at 21 years and goes up to 60 years for salaried employees. For self-employed borrowers, the maximum age to qualify is 65 years.

Benefits of Loan Against Property

The immense popularity of Loans Against Property can be attributed to its multiple benefits:

• It is a convenient type of loan that can be used for a variety of purposes.
• It is most suitable for large funding requirements. Most banks provide Loans Against Property to the extent of ₹100 crores, depending on the value of the property.
• Mortgage loan amount ranges from ₹20 lakh to ₹7.5 crore.
• The loan-to-value (LTV) ratio might be as high as 75% of the property's value.
• Flexible tenure: The LAP repayment tenure can last up to 15 years.
• Loans can be availed against both residential and commercial property.
• The longer tenure of LAP allows easier repayment through smaller EMIs, which means minimal monthly burden.
• It is ideal for large funding within a short span of time.
• Borrowers continue to be the owners of the property they have pledged for collateral to the loan. So in case of inability to repay, they can sell the property and repay the loan.

Loan against Property vs. Personal Loan

When compared to a personal loan, LAP can be a better option for a number of reasons:

• Since LAP is a type of secured loan, getting an approval is easier than for a personal loan, provided you have a good CIBIL score.
• Interest rates on LAPs are much lower than rates on personal loans. LAP comes with the second best interest rates after home loans.
• While personal loans are given for shorter tenures ranging from 3-5 years, the repayment tenure for LAP is usually longer, ranging from 15-20 years.
• Since the repayment term is longer, the EMI is also lower compared to those of personal loans. This makes LAP most suitable for those who cannot or prefer not to make high monthly payments.
• The processing fees on LAP are also lower than those of personal loans.
• While personal loans are limited to smaller amounts, LAP can be availed for much higher loan amounts, depending on the value of the property pledged.

Get Financing for Loan Against Property

Documentation required for Loan Against Property

• LAP Online Application
• Identity proof, which may be the applicant’s PAN Card / Passport / Driving license / Aadhaar Card
• Residence proof, which may be the applicant’s Voter ID / Electricity bill / Telephone bill / Property tax receipt
• Bank statements of the last 6 months
• Cheque for processing fee
• Identification of signature from present bankers

Apart from these, other documents supporting proof of income that need to be produced by the applicant are:

• Latest salary slips
• Certificate and proof of business
• Income tax returns of the past 3 years for salaried as well as self-employed applicants
• Profit and loss statement and balance sheet for the past 3 years, for self-employed applicants

Who Can Apply for a Loan against Property?

• Salaried employees between 21 and 60 years of age can apply.
• For Self-employed individuals the maximum age to qualify is 65 years.
• Professionals such as Doctors, Engineers, Architects, and Chartered Accountants are also eligible.
• Applicants should be in the business for at least 3 years.
• Partnership firms and Private Ltd. Companies.
• A good CIBIL score is also one of the primary requirements.
• Applicant’s monthly income, other liabilities and savings are also considered by the lender before approval.

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FAQs on Loan Against Property

Find answers to all your queries ranging from application procedure to eligibility criteria, interest rates, and documents required.

What is a Loan against Property?

A: Loan against Property is a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property's market value.

What are the properties against which a Loan can be availed?

A: You can avail the loan against the following properties:

• Commercial Property
• Residential Property
• Plot
• Lease Rental Discounting

How long will it take to approve the loan and disburse the amount?

A: Once your application is submitted, approval normally takes between 10 and 30 days.

Read FAQs on Loan Against Property Eligibility Online

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