Know about Loan Against Property in Detail

LAP – Know about Loan Against Property in Detail

A Loan against property is a common term in the real estate sector and the housing finance sector. A loan against property is a collateral-based secured loan that allows people to borrow funds by keeping their asset as collateral. The loan can be taken against both commercial and residential property. The loan against property allows the lender to sell the property and recover the loan amount, in case the borrower is unable to pay it. The loan can be availed don the following type of property:

● Residential property that is self-owned by the applicant
● Residential property that is self-owned and self-occupied by the applicant
● Residential property that is rented but self-owned by the applicant
● A piece of land that is self-owned
● A commercial property that is self-owned
● A commercial property that is self-owned but rented

Similar to a personal loan, a loan against property is availed for various reasons, that could be travel expenses, business expansion, wedding, education, for the purchase of land or property, renovation of a property, paying off debts, to avail balance transfer of loans, or for any personal reason. However, unlike a personal loan, the reason for availing a loan must be disclosed to the lender.

A loan against property can be availed for a loan amount as per the value of the property. Most lenders lend a loan up to 60-70% of the value of the property. Further, this loan can be availed for up to 15 years. The interest on LAP begins from 8.70%. Though these are some of the conditions to avail a loan against property, yet one is required to meet certain eligibility conditions. A LAP applicant should be aged between 21 to 65 years.

Apart from that, the monthly income of the salaried applicant should be Rs 40,000, and it should be Rs 3 lakhs per annum for a self-employed businessman. A credit score is also one amongst the other requirement that lender seeks in order to lend a LAP. Though a LAP is a secured loan yet, the LAP lender prefers taking into consideration the cibil score of the borrower to ensure the loan repayment. A cibil score of 650 and above is required to avail a loan against property.

In addition to the eligibility criteria, one is also required to meet the documentation requirements. To avail a Loan against property, one requires the identity proofs such as aadhar, PAN, driving license, voter ID card, and passport. Further, address proofs like utility bills such as electricity, water and gas, rent agreements, driving license and passport are also required. Self-employed professionals also need to submit the registration certificate of the business, PAN, partnership deed, trade license, and practice certificates. Apart from these, submitting the income documents like bank statements, profit and loss statements, ITR returns and cancel a cheque is also required.

Thus, a loan against property is a convenient loan for people who have properties registered under their name. The loan against property can be used well in times of financial crisis as they are available at a lower interest rate than a loan against property. However, before opting a loan against property, it is better to know about the terms and conditions associated with the loan. Also, ensure that you research well about the lender before availing a loan against property and thereby should choose a lender that best suits one’s need.

Summary:
LAP or loan against property is a credit facility that people go with, provided they hold an asset to be kept as mortgage. LAP is provided by various lenders in the market ranging from banks, NBFCs and housing finance companies. People can borrow funds by mortgaging their lands and properties irrespective of the type of property. These include a piece of land that is self-owned, commercial property that is self-owned, commercial property that is self-owned but rented, a residential property that is self-owned by the applicant, a residential property that is self-owned and self-occupied and a residential property that is rented but self-owned by the applicant.

A loan against property can be taken for arranging funds for various personal and professional reasons such as marriage, education, medical emergency, business expansion or purchasing assets for a business. However, to avail, one needs to keep certain things in mind when it comes to eligibility.
● The loan amount granted under LAP is 60-70% of the loan to value ratio.
● Currently, The interest rates on LAP begins from 8.70%
● The maximum tenure for LAP is 15 years
● The age of the applicant should be 21 to 65 years of age.
● Salaried applicant should be earning a minimum of Rs 40,000 to avail a LAp
● Self-employed professionals, on the other hand, should earn up to Rs 3 lakhs per annum
● Appliacnthsould hold a credit score of 650 and above

You are also required to submit some documents in order to avail the loan against property. These are listed as follows:
● Identity proofs such as Aadhar Card, PAN, driving license, voter ID card, and passport.
● Address proofs like utility bills such as electricity, water and gas, rent agreements, driving license and passport are also required.
● Self-employed professionals also need to submit the registration certificate of the business, PAN, partnership deed, trade license, and practice certificates.
● Income documents like bank statements, profit and loss statements, ITR returns and cancel a cheque is also required.

Russell Crowe

Russell Crowe

Graduated with BBA to enriching experience in SEO & Social Media Marketing. A passionate Digital Marketer who loves to stretch the limits. I am an enthusiast at creating eye-popping and mind-boggling content ideas. Always so excited to tap into my creative side that can help in business growth. Being a passionate marketer, easily attune with the client's core requirement. Craving head to learn and execute something new in life. Life mantra- "Learn, Cheer, Live". I am owner & Blogger of Digital Chatni, Lemony Blog, and Apzo Blog. If anyone wants to submit content on our website plz send mail on [email protected]

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