Loans Against Property

Loan against property (LAP) is granted against the freehold property, either residential or commercial. LAP is generally considered as a better loan option than the personal loan as it is cost-effective, convenient to avail and repay because of low mortgage interest rate. All banks and financial institutions have slightly different criteria and procedure.

Purpose

An applicant can avail loan against property for any purpose which is neither illegal nor a speculative activity. These are some valid purposes for loan against property:

  1. Wedding of your child
  2. Funding of dream vacation
  3. Expansion of your business
  4. Medical expenses
  5. Educational expenses of your child
  6. Other valid and legal purposes

Benefits & Advantages

  • Low-interest rate
  • Maximum time period for repayment varies from 10-20 years
  • Easy loan process
  • Lower rate of EMI
  • Ideal use of idle property
  • Available as Demand Loan or Overdraft as per need
  • No pre-payment charges
  • Maximum amount of LAP is Rs 5-7.5 Cr. subject to the value of property and monthly capacity of the borrower

Benefits of Having Co-Applicant

  • Helps in maximization of the loan amount
  • Having women co-owner of the property can help in providing better interest rate

Note: Co-owner and co-applicant is different thing. It is advised to have a co-applicant from the family members.

Eligibility Criteria

According to the various institutions, the applicant is required to fulfill the following criteria:

  1. Indian national
  2. Age: Minimum- 21 years, Maximum- 65 Years or retirement age, whichever is earlier
  3. Monthly earning of the person should not be less than the EMI
  4. Good Credit Score
  5. Salaried person or self-employed/ business person or an income tax assessee or an NRI with a residential property or commercial properties in his own name or in the name his/ her of spouse/ children/ parent/ sibling in India.

Security

LAP is granted against the mortgage of freehold immovable properties:

  • Residential Property (House/Flat)
  • Commercial Property (Building/Land & Building)
  • Plot of Land (not agricultural land)

Procedure

STEP 1: After selecting a bank, the applicant is required to fill the loan application form & attach the required documents.

 

STEP 2: Pay the processing fee of LAP which is generally 1 percent of total LAP and discuss the other required provisions with the bank.

 

STEP 3: Bank will evaluate the submitted documents. Legality of the documents will be checked by the bank. Technical check and site estimation is done by some banks.

 

STEP 4: After all the evaluations, the bank will send a sanction/ approval letter.

 

STEP 5: Signing of the LAP agreement and disbursal of the amount.

A loan against Property is a multi-purpose loan which can be availed for any purpose other than speculative or non-prohibitive activities some of the valid purposes are following:

  1. Wedding of your child
  2. Funding of dream vacation
  3. Expansion of your business
  4. Medical expenses
  5. Educational expenses of your child
  6. Other valid and legal purposes

While a home Loan on the other hand can be taken only for the purpose of buying, construction, renovation, extension, major repairs for a residential property.

According to the Income Tax Act 1961, the applicable tax exemption under section 24(b) of Rs. 2,00,000/- for the interest amount paid is for loans taken for purchasing or constructing house property. Hence, this benefit is not available for Loans against Property.

Yes, every bank and financial institution has different requirements and features for LAP like SBI provides up to Rs 7.5 cr. which is higher than Axis and HDFC Bank.

Yes, both salaried and self-employed applicants can avail Loan against Property.

LAP can be taken against both residential and commercial properties.

EMI is the amount payable to the lending institution every month, till the loan is completely paid off. An EMI includes the interest and a part of the principal amount.

Yes, NRIs can take loan against property but only few banks provide this facility because few banks have resident Indian as the first required eligibility for granting a loan.

LAP ought to be liquidated before eldest borrower attains the age of 70 years or period of loan crosses 10-20 years, whichever is earlier.

The lender has to keep in mind various factors while deciding the loan amount such as age, income, spouse’s income, past payments, value of property in consideration etc. The lender generally provides loan up to 50-60% of the value of the property mortgaged.

It takes about 7-10 days for the processing of loan after receipt of requisite documents by Bank or any Financial Institution.

What’s Included

  • Consultation with our Loan Advisor
  • Complete Assistance in Paperwork
  • Quick loan Disbursal

Documents Required

  • Passport size photographs
  • Advanced processing cheque
  • PAN Card
  • Proof of address (Aadhaar Card/ Passport/ Latest utility bills/ Bank Statement)
  • Proof of income:

For employed: Pay-slip/ IT Returns (3 years)/ Form 16

For self-employed: Last 1-year bank statement/ audited financial statements/ IT returns for last 3 years

  • Proof of continuity of income:

For employed: Current Employment Certificate/ Job Appointment letter

For self-employed: Company GST returns/ Professional Certificates

  • Investment proof (Fixed deposit/ Fixed assets/ Shares)
  • Property documents of the concerned property

Loan against Property


Loan against property can be obtained against any freehold property, commercial or residential. Filecrat will assist you in getting loan against your property at the best rates.

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