Loan Againast Property

Loan against property (LAP), are basically loans provided by banks against the security of one’s own property. LAP is designed to meet the financial needs of someone who already owns a house or multiple properties so as to get the best out of their assets. Its important to remember that the property which you are putting up for your loan should be free any encumbrance (i.e. it is not given as security for any purpose or any other loan). Banks provide LAP for both Salaried as well as Self-Employed individuals. The rates and loan amounts differ based on your property and your annual income. Banks will always want to consider all risks, which is why while you are applying for your loan against property, there are certain factors the bank considers with respect to your property to mitigate its risks in giving out the loan. These factors determine your rate of interest, and loan amount. You can get a LAP of up to 80% of the registered value of your property depending on the Bank’s policy and the property type and valuation. The value of the property would be determined through a valuation conducted by the Loan Provider. Individuals apply for LAP for a variety of reasons. Some of the common ones are your childs wedding, loans for new business ventures, second homes, vacations, medical treatment just to name a few.

• Important Questions on Loan Against Property

  What kind of processing fee do you need to pay for Loan Against Property?

  • A nominal fees and charges are to be paid to the Bank depending upon their term and conditions.
  • Loans against vacant 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.

• What kind of property is considered for Loan against Property?

  • 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.

• 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 ₹ 3 crores, depending on the value of the property.
  • The processing time is less than that of home loan applications.
  • 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.