Loan against Property
(LAP) or mortgage loan is a secured loan offered by banks and NBFCs against self-occupied / rented residential, commercial & Industrial property owned by the applicants.
The amount, which is availed by keeping the property as collateral till the loan is fully repaid, can be used by the borrower for various purposes like expanding a business, funding children’s education, meeting medical expenses, and more.
The applicant can avail of a maximum loan amount of up to 85% of the property market value. The LAP is one of the best low-cost products to avail quick long term funding from banks to meet all personal and business needs.
Features and Benefits of Loan against Property
- Best product for high amount and for a longer-term
- Suitable for business and can be used for working capital requirement
- Cost-effective as compare to Business loans & Personal loans
- Suitable for Salaried and self-employed
- The maximum term available is 15 years
This loan can be availed against self-occupied / rented residential property, such as a house, apartment, flat, and commercial properties like an office building, malls, shopping complex, shops.
How much can I borrow?
The Loan amount will be based on the following factor, which varies for the property type and current usage of the property.
- Self-Occupied property: – Maximum loan can be up to 75% of Market Value
- Rented Property: Maximum loan can be up to 55% of Market Value
- Self-Occupied property: – Maximum loan can be up to 55% of Market Value
- Rented Property: Maximum loan can be up to 50% of Market Value
- Self-Occupied property: – Maximum loan can be up to 45% of Market Value
What can I use a loan against property?
The borrower is free to utilize the loan amount as per his /her legitimate financial requirement like – Marriage in family, overseas vacation, property purchase, medical expenses, Higher education,
How quickly must I repay my Loan against Property?
Loan against property can be availed for a minimum term of 5 years; its repayment can be spread across a term of up to 20 years. This higher term can mean that borrowers can benefit from low monthly interest rates, but they will have to pay more interest. Now Banks has removed part payment charges on LAP and this option should be exercised regularly to repay loan against property.
Can a Loan against Property be repaid early?
Yes, there is the opportunity to repay a LAP early and you don’t have to pay early settlement charges if payment is made thought personal savings.
How can I shift Loan against property to another bank at low rates?
Any loan can be shifted from one bank to another to avail better rate of interest and other benefits. You need to check with the existing bank about the cost and charges for pre-closure. Our team will help you with a detailed comparative analysis of balance transfer offers to reduce your interest rate and EMI.
Our property is jointly owned by family members, does this mean that the Loan against the property must also be in Joint names?
A Loan against property is secured to the property rather than to the individual, which means that if the property is jointly owned, both owners must be taken on the loan application and their credit score will be considered for the loan. In addition to credit score, their financial eligibility will also be assessed to measure the EMI against their income.
My home is in a negative Area; can I still apply for a Loan against Property?
Your chances of obtaining a LAP may be affected if your home is in a negative area, or built without approved sanction plant.
How much is LAP Processing fees?
The processing fee for the loan against property varies from bank to bank and most of the banks up to 1% of the loan amount.
Cibil Score for Loan Approval
Nowadays, your cibil score plays a vital role in your loan eligibility assessment. Banks do review individual cibil report before sanctioning of any type of loan. There are banks that offer some discount to customers having a high cibil score. One must have a cibil score of 650 and above with a clear repayment track record of all existing loans.
How to find the best deal?
Finding the right mortgage loan to suit your needs can be a challenge, especially with so many different offers available.
This is where our experts can help. Our Loan comparison service covers the entire market, and, once you’ve answered a few simple questions, it can help search a better product as per your requirement. Our team will do all the leg work for you and get you the best possible deals to meet your home loan requirement.