Loan Against Property

Loan against Property (LAP), also known as mortgage loan, allows consumers to raise funds by leveraging their residential, commercial or industrial properties. Like unsecured personal loans, Loan against property (LAP) can also be availed for meeting both personal and business needs other than speculative purposes. Banks and HFCs offer loan against property for tenures of up to 20 years. The loan amount for LAP can go up to 75% of the property’s market value, depending on the lender and the credit profile of the borrowers. Many lenders also offer Lease Rental Discounting (LRD) facility, which allows consumers to avail loan by pledging the rental receipts of their tenants.

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Features & Benefits of Loan Against Property

Lower interest rates – The secured nature of the loan reduces lending risk of banks and NBFCs considerably, thereby, allowing them to offer the loan at lower interest rates.
No end use restrictions – Loan proceeds can be used for any purpose such as for consolidating multiple high-interest debts, covering costs related to wedding, business expansion, etc.
Longer loan tenure – Banks and NBFCs offer tenures of up to 20 years on loan against property, resulting in more affordable EMIs.
Higher loan amount – Lenders usually finance up to 70% of the property value, resulting in higher loan amounts.
Higher chances of loan approval – The loan is backed by any underlying property, thus, reducing lending risk for banks/NBFCs and increasing borrowers’ odds of availing the loan.
Overdraft facility – Borrowers can also avail overdraft facility on this loan, giving them higher liquidity at lower interest cost.

Interest Rates offered by Top Banks & HFCs

Lender	Interest Rates (p.a.)	Processing Fees
Bank of India	11.35% – 12.85%	Up to 1% of loan amount (Rs 5,000 – Rs 50,000)
Bajaj Housing Finance	9.75% – 18.00%	Up to 1% of loan amount
Bank of Baroda	10.85% – 16.50%	Up to 1% (Rs 8,500 upfront – Rs 75,000)
Bank of Maharashtra	10.45% – 11.95%	1% of loan amount
Federal Bank	12.60% onwards	1% of the limit sanctioned with a minimum of Rs. 3,000
HDFC Bank Limited	9.50% – 11.00%	Up to 1% of loan amount (minimum Rs 75,000)
ICICI Bank	10.85% – 12.50%	Up to 1% of loan amount
IDFC First Bank	9.00% – 16.50%	Up to 3% of loan amount
Indian Bank	10.00% – 12.75%	1% of loan amount
Indiabulls Housing Finance	9.75% onwards	1% onwards
Kotak Mahindra Bank	9.15% onwards	Up to 1% of loan amount
L&T Housing Finance	9.50% onwards	Up to 2% of loan amount
LIC Housing Finance	9.50% – 11.55%	Up to 1% of loan amount
PNB Housing Finance	10.40% – 12.75%	0.75% of loan amount (Max. Rs 1 lakh)
State Bank of India	10.00% – 11.30%	Flat Rs 10,000
Tata Capital	10.10% onwards	Up to 1.25% of loan amount
Union Bank of India	10.45% – 13.10%	Up to 1% of loan amount (Min. Rs 5,000 & Max. Rs 1 lakh)
UCO Bank	10.85% – 12.00%	0.50% of loan amount (up to Rs 2 lakh)

Note: Interest Rates as of 12 April 2024

Eligibility Criteria

The eligibility criteria for availing LAP varies across lenders, below are some general conditions that must be fulfilled to apply for loan against property:

Residential Status: Resident Indian and Non-resident Indian
Minimum Age Limit: 18 years
Maximum Age Limit: 70 years
Employment Type: Salaried, Self-employed Professional and Self-employed Non-Professional
Minimum Salary: At least Rs. 12,000 per month
Net Annual Income: At least Rs. 1.5 lakh p.a.
Work Experience: At least 1 year in the current organization
LTV Ratio: Up to 75% of property value
Credit Score: Preferably 750 and above
Property Type: Residential, Commercial and Industrial properties are eligible to be pledged as collateral. Lenders will also consider the age and condition of the property before accepting the property as collateral.

EMI Calculator

Before applying for mortgage loan, use FinIndia24*7’s loan against property EMI calculator to know how much EMI you can afford on a certain loan amount, interest rate and tenure. The online EMI calculator gives accurate results instantly and also displays total interest payable, total principal payable and amortization schedule to help you understand your loan repayment better.

Required Documents

Proof of Identity (Passport/ Voter ID Card/ Driving License/ PAN Card)
Proof of Residence (Ration card/ Telephone Bill/ Electricity Bill/ Rental Agreement/ Passport/ Bank Passbook or Statement/ Driving License)
Proof of Age (PAN Card/ Passport/ Any other certificate from a statutory authority)
Proof of Income for Salaried (Form 16, Latest Payslips, ITR of past 3 years and investment proofs (if any)
Proof of Income for Self Employed (Details of ITR of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details and Proof of Business Address)
Property-related Documents (Title Deeds including the previous chain of the property documents, Nil Encumbrance Certificate on the concerned property, approved plan [if applicable])

Read Also: The complete list of documents required for loan against property

Processing Fees & Other Charges

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

How to Apply?

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.

FAQs on Loan Against Property

1. What is Loan Against Property?

Ans. Loan against property is a secured loan option wherein borrowers avail financing by mortgaging their commercial or residential property. Borrowers can use the loan proceeds for any purpose other than any speculative activities.

2. Which bank is best for availing loan against property?

Ans. For most consumers, the best bank/HFC for availing loan against property would be the one that offers the lowest interest rate as it would help them in saving on their overall interest cost. However, other features like loan tenure, LTV ratio, processing fees, pre-payment charges (in case of fixed rate LAPs) and loan disbursal time should also be factored while comparing various LAP options.

3. How does loan against property work?

Ans. A LAP borrower secures loan from a bank/NBFC/HFC by mortgaging his/her property and repays it over the loan tenure. Just like any other secured loans, the lender would foreclose on the mortgaged property in case of loan default.

3. What is the maximum loan tenure available under LAP?

Ans. Mostly, the tenure of a loan against property goes up to 20 years. However, this may vary from one lender to another.

4. What is the eligibility criteria for availing Loan against Property?

Ans. Your eligibility for availing loan against property would primarily depend on your age, property location and features, repayment capacity, credit score, occupation profile, etc.

5. What is the advantage of availing loan against property?

Ans. A few benefits of availing loan against property are:

Interest rates lower than the rates offered on unsecured loan options
Loan proceeds can be used for covering costs related to wedding, business, etc.
Longer loan tenure of up to 20 years, leading to more affordable EMIs
Bigger loan amount as banks and HFCs usually finance up to 70% of the property value
Higher chances of loan approval due to its secured nature
Overdraft facility is available, thereby, leading to lower interest cost
Consolidate multiple high-interest debts at lower interest rates

6. Is it mandatory to have a co-applicant for availing LAP?

Ans. A co-applicant for a loan against property is mandatory only when the property being mortgaged is owned by more than one person. In such a case, all co-owners of the property need to apply as co-applicants.

7. What types of properties are accepted by lenders providing Loan Against Property (LAP)?

Ans. Different lenders have different criteria for the type of property to be accepted against a mortgage loan. However, mostly all lenders accept the residential, commercial or industrial property. It is important to note that the physical condition and age of the property may affect its acceptance by the lenders.

8. What is the maximum repayment tenure for a Loan against Property?

Ans. Banks/ HFCs usually offer loan against property for tenures of up to 15 years with many lenders offering maximum loan tenures of 20 years or more. For example, Bajaj Housing Finance and Godrej Capital offer loan tenures of up to 30 years and 25 years, respectively.

9. Can NRIs avail loans against the property?

Ans. Yes, there are several financial institutions that offer loan against property to NRIs.

10. What is the difference between Home Loan and Loan against Property (LAP)?

Ans. LAP allows individuals to raise funds by mortgaging their residential/commercial/industrial property, whereas home loan helps individuals buy/build a new house or extend/renovate an existing one.

11. What happens when Loan against Property is not paid?

Ans. Not paying your LAP EMI will incur late fees, penal interest and reduction in your credit score. Loan, if not paid partially/fully within 90 days, will be classified as Non-Performing Asset (NPA), which may lead your lender to initiate recovery actions under the framework of the SARFAESI Act, 2002.

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