Simply put, a loan against property is what it actually connotes — a loan given or disbursed against the mortgage of property. This is unlike a personal loan, which is disbursed to an individual; no questions asked. The loan is given as a certain percentage of the property’s market value (usually around 40 per cent-60 per cent). But the threshold amount too is generally defined by most lending institutions like say, Rs 200,000. This multi-purpose loan puts funds at your disposal to use as you wish. It unlocks the hidden value in the property you own.
Features at Glance
• Loans from Rs 20 Lakh onwards depending on your needs
• Borrow up to 75% of market value of the property
• Flexibility to choose between an EMI based loan or an overdraft
• High tenure loans for ease of repayment.
• Attractive interest rates.
• Simple and speedy processing.
• Loan for salaried & self-employed individuals
Advantages of taking a Loan Against Property:
• Cheaper than Personal Loans: It works out to be much cheaper than a personal loans, which is usually issued at interest rates in the region of 13 per cent to 21 per cent.
• Longer Loan Tenure: The tenure for a Loan Against Property is usually longer than that for a personal loan. Generally, LAP is given for a maximum tenure of 10 years.
• Lower EMI: Since the rate of interest is lower, many times, LAP Equated Monthly Installments (EMI) turn out to be cheaper than those under personal loans.
• Simple documentation and Fast Approvals: LAP being a secured Loan has comparatively faster approvals and minimal documentation.
Loan Against Property can be taken for following purposes:
• Expanding your business
• Get your child married
• Send your child for higher studies
• Fund your dream vacation
• Fund Medical Treatments
In nutshell, Loan Against Property is a secured multi-purpose loan with larger tenor and lesser rate of interest.
Loan against Property is a secured loan. If you own residential or commercial property you could utilize the value of the same by opting for a equitable mortgage loan. The property papers are taken as security for a loan at a much lesser rate than personal loan. The ownership of the property is retained by you. In case of inability to repay the loan the property could be disposed off to repay dues.
Normally loan against property is taken for a long term for working capital, expansion, repay expensive personal loans etc. You could also opt for an overdraft facility, which is renewed ever year.
Loan amount could range from Rs.5 lakh to Rs.5 Cr.
Loan tenor could extend upto 15 years .
Eligibilty depend on your income and the market value of the property.
Rate of interest could range between 12% to 16%.
All Purpose Loan
One can use this loan for a variety of purposes, like funding existing business,
debt consolidation, emergencies, education etc.
Loans against residential & commercial properties ranging from Rs.10 lakh to Rs.3 crores.
It is an ideal product for debt consolidation.
Flexible process.LAP can be availed on either self owned or family owned property.
Attractive Interest Rates.
Easy repayment through EMI’s or overdraft facility.
Loans to Salaried and Self Employed.
This criteria varyS from one bank to another.some of the common factors are:
Minimum age required is 21 yrs for salaried and 23 years for selfemployed.
Maximum years is 50 years for salaried and 65 years for selfemployed.
Minimum income should be Rs.20000/- per month.
Loans can be applied by individuals, either solely or jointly.
Owners of the current property, in respect of which the loan is being sought,
will have to be co-applicants. However, the co-applicants need not be co-owner
Individual financers have there own geo limitations.Generally most of the
banks prefer the property to be located within City Limits.
LAP is available from minimum 1 year to a maximum of 15 years.
What are the interest rates ?
Interest rates on loan against property range from 9 per cent to 13 per cent.
What are the modes of repayment?
There are normally 2 modes of repaying either opting for a overdraft facility or
through regular EMIS.
What is the difference between a LAP and a personal loan?
LAP is taken by mortgaging property.
Personal loan is without any security or guarantors.
LAP is Cheaper then Personal loans generally 9%-13% interest rate.
Compared to LAP interest rates fall in the range of 16%-21%
Personal Loan is available from Rs.50,000/- upto Rs.20 lakhs
LAP is available from Rs.10 lakh upto Rs.15 crores.
Maximum loan tenure for LAP is up to 15 years (180 months)
Maximum loan tenure for personal loan is up to 5 years (60 months)
What percentage of the property value is the loan sanctioned?
LAP is sanctioned upto 60% of the property value if residential
and 40% to 50 % in case of commercial.
What documents are required ?
Though the documents vary from bank to bank the common documents are:
Proof of Identity
Proof of age
Proof of Signature
Proof of business existence
Qualifications Certificate (For Salaried)
Proof of business existence
Income Proof Salary Slips ,Form 16(For Salaried)
3 years Income Tax returns (self and business)
Property Documents & NOC from Society.
Last 6 months bank statements
Processing fee cheque
What happens if the loan is not repaid?
The Property can be repossessed by the lender to recover its
outstanding loan amount. To allow recovery of the loan amount, courts can order
foreclosure (sale in the open market to recover dues) of the property.