Loan against Property

A Loan Against Property (LAP) allows the consumers to raise funds against their residential, commercial, or industrial properties. These funds can be used for various personal or business financial needs, such as medical emergencies, business expansion, or home renovations. Even after getting LAP, you maintain the ownership and usage rights of your property. These bank loans come with the lower interest rates in comparison to unsecured bank loans.

Last updated: 24 December, 2024

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Eligibility Criteria for Loan against Property

  • Age Requirements: Applicants must be aged between 18 and 70 years.
  • Residential Status: Both Resident and Non-Resident Indians (NRIs) can apply.
  • Eligible Applicants: Salaried individuals, self-employed professionals, and self-employed non-professionals.
  • Income Minimums: A monthly salary of at least ₹12,000 and a net annual income of ₹1.5 lakh or more.
  • Professional Experience: Minimum of 1 year with the current organization or in the current business.
  • Creditworthiness: A score of 750 or above is considered good.
  • Property Eligibility: Residential, commercial, and industrial properties qualify as collateral.

Documents Required to Apply for Loan against Property

  • Identity Proof: PAN Card, Passport, Voter ID Card, Driving License
  • Age Proof: PAN Card, Passport, Birth Certificate, or any official document from a statutory authority
  • Residence Proof: Passport, Ration Card, Rental Agreement, Utility Bills (Telephone/Electricity), Bank Passbook or Statement, Driving License
  • Income Proof
    • For Salaried Individuals: Form 16, Latest Salary Slips, Income Tax Returns for the past 3 years, Investment Proofs (if any)
    • For Self-Employed Individuals: Income Tax Returns for the last 3 years, Balance Sheet and Profit & Loss Account Statements, Business License Details, Proof of Business Address
  • Property-Related Documents:
    • Title Deeds, including the property's historical documents
    • Approved Building Plan (if applicable)
    • Nil Encumbrance Certificate for the property

Loan Against Property Processing Fees & Other Charges

Here are some general fees and charges that may be applicable to your mortgage loan:

Processing Fees 1% - 2% of loan amount
Part Prepayment Charges

Floating Rate: Nil

Fixed Rate: Up to 4% on outstanding principal
Penal Interest Usually at 24% p.a. (2% per month on the overdue installment/s)
Foreclosure Charges

Floating Rate: Nil

Fixed Rate: Up to 2% on outstanding principal

How to Apply for Loan Against Property at MybankingTips?

  • Step 1: Provide basic details such as your mobile number, loan amount, property location, employment type, etc.
  • Step 2: Compare and apply from the list of offers.
  • Step 3: Wait for the loan experts to get in touch with you.
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Features and Benefits of Loan Against Property

  1. Higher loan amount
  2. Longer loan tenure
  3. Lower interest rates
  4. No end use restrictions
  5. Higher chances of loan approval
  6. Overdraft facility

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Faqs Loan Against Property

A Loan Against Property is a type of secured loan where you pledge your property as collateral to borrow money from a bank or financial institution. You can put your residential, commercial, or industrial property as collateral. You can use this money for funding a wedding, expanding a business, or consolidating debts or other purposes.

A Loan Against Property comes with several advantages. It comes with lower interest in comparison to unsecured bank loans. You can repay these loans for an extended period of 20 years.

The lenders decide the eligibility for the Loan Against Property(LAP) based on various factors such as the borrower’s age, the location and condition of the property, repayment capacity, and credit score. The eligibility criteria vary for each lender or financial institute.

Properties such as residential, commercial, and industrial properties are accepted as collateral for the loan against property. Then the lender evaluates your loan application based on the condition, location, and age of your property.

The maximum repayment tenure for the loan against property ranges from 15 to 20 years based on the different lenders. The longer tenure makes the monthly payment affordable but in the end, you end up paying the higher overall amount.

If you fail to pay the loan against the property then the banks will impose late fees and penalty interest charges on you. This can also drop your credit score. After 90 days your unpaid loan is declared Non-Performing Asset (NPA) and you will face legal challenges and the banks can also sell your property.

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