Beginner’s Guide to Loan Against Property (LAP)

Loan Against Property

Loan against Property (LAP) is a loan which you get by keeping a commercial/residential property as a collateral. This makes it a secured loan as you give a guarantee of repayment using the property as the security.

Below, we have listed some of the important FAQs regarding Loan Against Property:

  1. How much loan can I get against a property?

    The loan amount you will get depends upon the value of the property you want to mortgage as a security. Generally, lending institutions sanction a loan of up to 65% of the value of the property.

  2. What is the loan against property interest rates?

    The Rate of Interest for LAP ranges from 10% to 15%.

  3. What is the tenure of the loan?

    The tenure of loan can be up to 30 years.

  4. What is the loan against property eligibility criteria?
  • You should be a regular income holder.
  • You should have a property in your name.
  • The value of your property mortgaged will be taken into consideration.
  • Your past repayment record for loans, credit cards, etc.
  • Any debt in past will be taken into consideration.
  • Your savings amount will also be taken into consideration.
  1. What type of properties will I be able to take a loan against?
  • Self-owned residential property
  • Self-owned and self-occupied residential property
  • Self-owned but rented residential property
  • Self-owned piece of land
  • Self-owned commercial property
  • Self-owned but rented commercial property
  1. Against what can the LAP be used for?
  • To convert working capital limit to term loan
  • Business Expansion
  • Debt Consolidation
  • To convert your current loan at an attractive rate of interest
  • Purchase of plant and machinery
  • Travel, marriage, education and other personal requirements

However, we would suggest that you keep the below mentioned points in mind before you sign up for a LAP:

  1. Opt for a shorter tenure

Loans against property comes with a tenure of up to 30 years which makes it very tempting to opt for a lower EMI. But in the long run, you end up paying more interest rate than you would have paid if you opted for a shorter tenure. The best solution is to ask your loan provider to keep increasing your EMI amounts every year in line with the rise in your income so that you repay the loan sooner.

  1. Make the EMI payments on time

When it comes to paying the EMIs, you should always make it a ritual to pay it on fixed dates every month. This will not only save you from not getting a late payment penalty but will also maintain a good record in your credit score. Irregular payments of loans may decrease your chances of taking a loan next time. To calculate your EMI, Visit Home Loan EMI Calculator page!

  1. Huge Loans + Insurance = Lesser stress on family

If you take a loan of a huge amount then we advise you to take an insurance cover as well. This will lessen the burden on your family under unfortunate circumstances. You can opt for an insurance equal to the amount of loan or a regular term plan insurance which will continue even after your loan repayment, whichever is more suitable.

To find out the mortgage loan interest rates and more key features of LAP click here.

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