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Loan Against Property

Unlike a Personal Loan, Loan Against Property (LAP) is a variant of secured loan. A secured loan is a loan where the borrower pledges some asset or property as collateral to the lender. Loan Against Property could be used for personal and professional needs such as refurbishing home, educational expenses, expanding the business, purchase of new machinery and others. The borrower can take a loan against his residential, commercial and industrial property. Usually, the financial institutions offer a fixed percentage of the property value known as loan to value (LTV) as loan amount. Loan to value varies from bank to bank which usually ranges from 40% to 70%. Once the borrower pledges his property as mortgage he can continue using it for the respective purpose (commercial or residential).

Personal Loan and Loan Against Property both could be used for personal and professional needs. However, the interest rates of LAP are relatively lower than a Personal Loan. Loan Against Property can be availed by salaried and self-employed professionals.

 

 Key Facts About Loan Against Property (LAP)

Loan Against Property can be further understood with the below mentioned key facts:

Loan Against Property Interest RateStarting from 8.50% 
Loan to Value (LTV) 
  • Ranges from 60% to 70%
  • LTV as per different property types:
  1. Commercial property- 55-65%
  2. Residential property-65-70%
  3. Industrial property- 40-55%
Loan Tenor Flexible loan tenor up to 15 years, however the tenor varies depending on the age of the borrower 
Processing Fee Ranges from 0.50% to 1% of the loan amount
Loan Amount 
  • Minimum Rs. 3 lacs
  • Maximum Rs. 100 crores  (Based on type of property and loan purpose)
Who can Apply? 
  • Salaried Individual
  • Self-Employed Individual
  • Professional  
  • NRI (Subject to documents verification)
Prepayment of Loan Prepayment could vary from 2-5% (Read loan sanction terms carefully) 

 

 

 Eligibility Criteria for Loan Against Property (LAP)

To obtain Loan Against Property the borrower should fulfill the eligibility criteria. The following factors affect the loan eligibility of the borrower:

Age 
  • Minimum 21 years (At the time of loan application)
  • Maximum 65 years (At the time of loan maturity)
However, the age may go up to 70 years and above in special cases. 
Job Experience or Business Stability 
  • Salaried Employees: Minimum of 2-3 years
  • Self-Employed: Cash profit of at least 3 years
CIBIL Score 

Good CIBIL Score

(Usually 650 and above is considered as good)

 

 

Required Documents for Loan Against Property (LAP)

If the borrower is eligible for the loan, he is required to submit the required documents for the timely and hassle-free disbursement of the loan amount. Refer to the below table to know more:

 Type of document Salaried employeeSelf-employed
Salary slips/ ITR 
  • salary slip for last 3 months
  • Bank statement or copy of passbook of last 6 months
  • ITR (Income Tax Return) for last 3 years as certified by CA
  • Copy of Passbook or Bank Statement for last 6 months
Income Proof 

Any one of the following:

  • Form 16
  • PF Statement
  • Appointment Letter
  • Balance Sheet of last 3 years
  • Profit and Loss Statement of last 3 years
  • Schedules and Annexure
Identity proof 

Any of the following:

  • Aadhar Card
  • Passport
  • Voter ID
  • PAN
  • Driving License

Any of the following:

  • Aadhar Card
  • Passport
  • Voter ID
  • PAN
  • Driving License
Job or Business stability Full-Time job with a relevant number of years

Proof of business registration:

  • GST Number
  • Incorporation Certificate
Photographs  Two passport sized photographs signed across Two passport sized photographs signed across
Residential address proof 

Any one of the following:

  • Registered Rent Agreement
  • Passport
  • Utility Bill (Up to 3 months old)
  • Driving License

Any one of the following:

  • Registered Rent Agreement
  • Passport
  • Utility Bill (Up to 3 months old)
  • Driving License
Other documents  
  • Employment contract
  • Appointment letter if job is less than 1 year old
  • Cheque of processing fees in favor bank or NBFC
Cheque of processing fees in favor bank or NBFC

 

 

 Why take a Loan Against Property through mymoneymantra?

Mymoneymantra is a leading financial services marketplace with an experience of more than three decades. The mymoneymantra team consists of experienced and service-oriented professionals who will help you choose the best loan offer, suitable to meet your specific requirement. They will keenly analyze your financial needs, and then help you throughout the loan process beginning from the submission of loan application till the loan disbursal into your account and even afterwards for any service requirement.

You can get in touch with our loan experts anytime and obtain the best loan offers.

 

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