Things you must know before taking Loan against Property.

Loan against property (LAP) is also known as ‘Home Equity Loans’ and is a kind of loan against the security of one’s property. Loan against Property is considered to meet the financial needs of a person who before now has a house, which is free from any burden.


How much loan can you get?

To calculate eligibility of loan against property, a lender will look at a certain percentage of the market value of your property and your repaying capacity. The lender will also look at your repaying capacity by taking into account your income minus other equated monthly installments. There is also an age limit to take this loan; minimum is 21 years and maximum 60 years. The minimum loan amount you can get is Rs.5 lakh and maximum depend on upon the client.


What are the documents you required?

  • ID proof (PAN Card, Driver’s license, Voter ID, Passport, Aadhar)
  • Address proof (Electricity bill, Telephone bill, Ration card, Bank statement, Credit card statement)
  • Passport Size Photo
  • 3 month’s Salary slips
  • 3 month’s Bank statement
  • Last 2 years Form 16
  • Sale Agreement
  • Property documents
  • Receipt of Booking/Advance payment (If any)

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What’s the interest rate and tenure?

Ever since loan against property are secured loans, since you credit your property with the lender to gain, it is cheaper than personal loans. The tenure of the loan against property can go up to 10-15 years.



What you must know about Loan against Property.

The most universal tradition to obtain funds is to take a loan. The loan might be a personal loan for the requisite amount or you possibly will take a loan out on your property.

A loan against property (LAP) is a loan given or disbursed against the mortgage of a property. The loan is specified as a firm percentage of the property’s total value, usually 40% to 60%. This loan falls beneath the secured loan category where the property is used as security. These loans can be in use for various reasons such as financing your commerce, meeting family obligations such as marriages, the purpose of higher education, funds of medical treatments or your personal reasons.

The loan can be taken out of your self-occupied or rented housing property. This can be a house or still just a plot of land. To be qualified to apply for a loan against property, banks must endorse the following field of the applicants:

Your income, savings, liability obligations

Cost/value of the possessions mortgaged

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Repayment track evidence for other loans, credit cards, etc.

At the same time as most banks have another criterion as well; these three are widespread amongst them all. The interest rates on loan against property start from 10.45% and the tenure is for 15 years.

A loan against property is one of the finest ways to lift money. The only drawback of this kind of loan is that if the borrower is not capable to pay back the loan, the bank takes ownership of the property which was used as security. So, before taking this kind of loan, one is supposed to take into account how dependably they would be capable to pay back the loan.



Fine Points Relating To Loans against Property.

Loan against property is that loan that is given by a bank or financial institution when a Borrower mortgages his/her property to the bank. The loan is not equal to the whole market value of the property but is a fraction of it. The amount of the loan varies from 40% to 60 % of the total loan amount.


As the bank gets a security for providing you the loan, the loan is offered to you at a lower rate. A personal loan in India is given at a repayment interest rate of 13 to 25% where as the loan against property can be availed at a rate of 11% to 16% interest rate.


You can also A apply for loans online in India.

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Fine Points about Loans and Loans against Property Eligibility

  • If the property that you have mortgaged has more than one owner, all the owners are required to apply collectively for the loan.
  • Loan against property can be taken against a range of properties. Whether you own a plot, a house, live in the house you wish to mortgage, you can take a loan against it. You can also take loans against a property that you have rented to others. The property must be freehold, and you should be the owner of it.
  • The bank will check all the documents related to the property. During the loan process, you will be required to have documents that show that you have the title of the property, telephone bills, electricity bills, and residence proof. Identification proofs in the form of PAN card, passport or voter ID card are also required. In case you are a salaried employee, your bank statements for the past 6 months would be required. If self-employed, the bank would require financial statements and balance sheets of the past 2 years.
  • At most banks, the minimum age required is 21 years, and the maximum age is 60 years for an employed person or 65 years for an unemployed person.
  • Further, the banks also review your financial reputation by accessing and reviewing your credit score. If you have a good financial track record and have a good credit score, then the loan will be granted to you rather easily. The bank will access your repayment capacity and grant you the loan when satisfied on all counts.



Loan against Property Benefits more than other Loans.

There may happens a situation, when you are in dire need of money for some reason, and options like borrowing money all the way through friends or family members are always obtainable to you. There are some more options which can lift large sums like loan against property or more commonly known as LAP. It is a suitable and easy means to have access to the funds and meet the financial requirements with the help of the banks at lower rate of interest. You can make use of your property to have a right to use to the funds as offered by the banks. In general cases, the banks offer as much as 70% of the loan amount based on the estimate of the property being offered by you as collateral.


Benefits of Loan against Property more than other Loans

One must always keep the truth in mind when we talk about loan against property that this loan is a secured loan. Therefore the bank by no means hesitates in offering a good loan amount against the property being used as collateral.


Cheaper Loans Choice

While several loans are obtainable in the market like personal loans, the loan against property holds an enormous advantage when in contrast with such loans. The loans against property are the cheaper loans comparatively personal loan and thus, are an effective way to meet your needs and demands throughout the times of financial need. Another fact states so as to, only home loans are cheaper than the loan against property and therefore one can fairly simply appraise the helpful part allowing for the rates of interest.


Long Tenure

Another advantage linked with the loan against property is the loan tenure, which is much longer in this case, while personal loans, have a short period ( a maximum of 5 years) for loan repayment, the loan against property is a good alternative, with the tenure extending to around 20 years, in case, the loan amount is high.


Small EMIs

Since the loan tenure is of long duration, the EMIs are automatically going to be little. The EMIs are small and thus making it simple for the borrower to pay the loan amount and its interest with much easiness.

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Secured Loans

While the loan against property is a secured loan, claiming for this loan is fairly easy in contrast to the other loans, which is an essentially high effort to get empty. The only requirement for this loan is a clear title of property and all the essential proofs sustain it.


Property Options

The options are broad when it comes to putting the property as security in case of a mortgage loan. An individual can set off either a residential property or a commercial one for the reason of a seeking loan. Even, one can claim the loan against the property with the piece of land or even through the property under construction, thus as long as a wide range of options for the people looking for the loan against property.


EMI Based Loan or an Overdraft Facility

Several banks offer a feature linked with the loan against property in the form of the paying up of loan amount either in the form of EMI Based loan or an overdraft facility, suiting your needs. The overdraft limit will be resolved by the estimation of the property and your account history.


Fulfill All Your Needs

While the loan against property can be used to assemble all the needs of your personal life, there is no limit attached to this loan. Well, apart from personal loans, one has to supply all details of the exact purpose of the loan. For example, in the case of an educational loan, you need to furnish all details of the educational, financial needs, marriage loans, car loans require the car to be bought etc. The amount as claimed beneath the loan against property can be used in all legal demands and needs of the person and one can use the money in the way, the person desire.


For example, one can employ the money in increasing the business or for vacation. One can support the medical treatment or for studies of kids or marriage of their kids or any other life event. Even, it can be used to close off other high cost loans, which are affecting your personal life or the way you live.


The loan against property can be used to get together all the demands and wants of an individual just like personal loans, and thus there is no link as such associated with the loan against property.


Top Up

Another significant feature of loan against property states that if the value of the property rises during the tenure of the loan, the borrowers have the choice to get a top up on the existing loans. This feature can be very helpful to the person chiefly in case, if he/she is a business owner.


Pre Closure

With the per closure options obtainable just like many other loan types, the person can prepay the loan amount and get free of the liability. Though, in a number of cases, like in fixed rate of interest cases, the person has to pay the prepayment penalty just like other loan types.


The decision to take on the specific loans totally depends on the choice of a person and the choice can depend on several other factors. While the loan against property is one of the best ways to raise funds in quick time, especially when the required loan amount is high. With almost no difficulty as long as you are able to repay the loan there are no hassle linked with the loan against property and calls out for the best option.