What is a loan against property?
Loan Against Property (LAP) is a type of secured loan that allows individuals to apply for a loan by mortgaging their residential or commercial property. The LAP full form refers to "Loan Against Property," which is an easy and effective way to access funds by leveraging the value of your property.
The LAP meaning is simple: it is a loan that you can avail by pledging your property as collateral. The money obtained can be used for a variety of purposes, such as weddings, education, home renovations, medical expenses, travel, and more. The loan amount is typically determined based on the value of the property pledged, along with other factors like the applicant's repayment capacity and credit history.
- Competitive rate of interest: A loan against property is secured by a mortgage and reduces the lenders’ risk, so you can get lower rates of interest compared to unsecured loans
- Fast approval and disbursal: Receive quick loan approval by meeting basic eligibility terms and submitting minimal documents. With Bajaj Finserv the loan is disbursed to your account within 72 hours* of approval
- High-value funding: Avail ample funding based on LTV or loan to value ratio, which ranges between 80% of the property’s current market value. It depends on your profile as a borrower and other factors like property location and amenities.
- Zero end-use restriction: Use the funds to meet diverse expenses, be it higher education or purchase of another asset
- Affordable EMIs: The lengthy tenor helps you pay EMIs hassle-free. Further, our Flexi Loan facility allows you to pay just interest as EMIs for the initial tenor, which further reduces your monthly outgo
- Digital monitoring: Now keep a track of all your loan developments and EMI schedules through the Bajaj Finserv online platform
- Long repayment duration: Salaried applicants can repay our Loan Against Property in up to 15 years* and self-employed borrowers in up to 15 years
- Zero contact loans: Experience a truly remote home loan application from anywhere in India by applying Bajaj Finserv online home loans and getting an easy approval
- Income tax exemptions: Depending on how you use the funds, you can enjoy tax benefits.
So, opt for a loan against property to fulfil all your big-ticket funding requirements.
*Conditions apply.
Documents required for a loan against property
Documents required to apply for a loan against property include
- Aadhaar Card, PAN, Voter ID, Passport, Driving License, etc. as proof of identity and address
- Bank account statements (3 months if salaried and 6 months if self-employed)
- Mortgage documents
- Income tax returns
- Latest salary slips (only if salaried)
- Proof of business registration – GST registration certificate, trade license, partnership deed, Udyog Aadhaar Memorandum, etc. (only if self-employed)
Eligibility criteria for a loan against property
Eligibility criteria to apply for a loan against property include –
- You must be between 25 years (18 years for non-financial property owners) to 85 years* (including non-financial property owners)
* 85 years* of age or less at the time of loan maturity - Salaried applicants to be employed with an MNC or private/ public sector company
- Self-employed applicants have a regular source of income
- A credit score of 700 or above
Benefits of LAP
Benefits of a loan against property include
I. Zero end-use restriction
A Loan Against Property is a high-value advance that can be used to meet diverse expenses like higher education, wedding arrangement, home renovation, debt consolidation, business investment, purchase of another asset, etc.
II. Offers income tax exemptions
Income tax exemptions on Loan Against Property depend on the end-use of the funds. Can be used for home renovation to avail an exemption of up to Rs. 30,000 under Section 24(b). The loan amount can be utilized for house construction or purchase to avail deductions up to Rs. 2 lakh under Section 80(b). Under Section 37(1), can claim tax deductions on the utilization of loans for business purposes. The exemptions are applicable if the loan amount is utilized for specific expenses not covered under the Section 30 and 36.
III. Competitive rate of interest
A Loan Against Property is secured by a mortgage and reduces the lenders’ risk, allowing them to offer it at lower rates of interest compared to unsecured advances like personal loans.
IV. Affordable EMIs
You can opt for an extended tenor of up to 15 years and pay EMIs affordably. Further, Bajaj FinServ’s Flexi Loan facility allows you to make multiple withdrawals from a pre-sanctioned loan amount. Interest is charged only on the amount withdrawn, thus making EMIs further affordable.
The amount of loan against property a borrower receives depends on the current market value of the mortgaged property, among other factors. LTV is another essential factor that affects the amount of loan against property a lender sanction.
*Conditions apply
Things to consider before getting a loan on property
- Property valuation
Ensure your property has a good market value, as it directly impacts the loan amount you can receive. - Loan repayment ability
Assess your income and financial stability to ensure you can repay the loan comfortably. - Interest rates
Compare interest rates from different lenders to secure the best deal on your loan against property. - Tenure and EMI
Understand the loan tenure and EMI structure, ensuring it fits your financial plans. - Legal documents
Make sure all property documents are in order and clear of disputes to avoid complications during the loan process.
Myths about LAP Loan
- LAP is only for large businesses
Many believe that a LAP loan meaning applies only to large businesses. However, it is available for individuals as well, especially homeowners seeking financial assistance for personal expenses. - You need a high credit score
While a good credit score can help, it is not always a strict requirement. Lenders mainly focus on the value of the property and the applicant's repayment capacity. - LAP take too long to process
A common myth is that LAP loans take months to process. In reality, with minimal documentation, many lenders offer quick disbursal, often within a few days. - You lose full control over the property
Although you mortgage the property, you retain ownership and can still live in or use the property as long as the loan is repaid on time. - LAP are expensive
The interest rates on LAP loans are usually lower than unsecured loans, making them an affordable option for many.
Frequently asked questions
A Loan Against Property (LAP), also known as a mortgage loan or property-backed loan, is a type of secured loan in which you pledge your residential or commercial property as collateral to obtain funds from a financial institution or lender. The property used as collateral could be a house, apartment, land, or commercial space.
In the financial and banking context, ‘LAP’ often stands for ‘Loan Against Property.’ It refers to a type of secured loan where borrowers use their property (usually residential or commercial) as collateral to obtain a loan.
Yes, Loan Against Property (LAP) can be used for various personal expenses, including weddings, education, medical costs, home renovations, or any other financial requirement.
The loan amount under LAP is primarily determined based on the market value of the mortgaged property, the applicant's repayment ability, and other factors like income, credit score, and property type.
Yes, LAP can be used to consolidate multiple debts. By pledging property, you can obtain a larger loan to pay off existing liabilities, making it easier to manage your finances.
