What is a loan against property?
A loan against property (LAP) is a secured loan provided by financial institutions, where the loan amount is sanctioned against an asset pledged as collateral. This asset can include owned land, a residential house, or any commercial property. The property remains with the lender as collateral until the entire loan amount is repaid. Understanding LAP loan meaning is essential, as it offers a convenient way to access funds for personal or business needs by leveraging the value of your property.
With this provision, the sanction is usually quite high and the tenor spans across decades. Further, loan against property interest rates are considerably lower as compared to any unsecured loan. For a cost-effective and hassle-free experience, pick a top-tier lender like Bajaj Finserv. With our offering, you get access to a wide range of loan benefits and perks.
Purpose of LAP (Loan Against Property)
A Loan Against Property (LAP) is a secured loan that allows individuals or businesses to borrow money by pledging their residential or commercial property as collateral. The primary purpose of LAP is to provide access to substantial funds for various financial needs, whether for personal or business use. LAP is typically used for purposes like funding higher education, business expansion, medical emergencies, or debt consolidation. Since the loan is secured by property, it generally comes with lower interest rates compared to unsecured loans such as personal loans, making it an attractive option for borrowers looking for substantial amounts of money.
One key advantage of LAP is that the funds can be used for any purpose without restrictions, providing borrowers flexibility in their financial planning. Additionally, LAPs often have longer repayment tenures, which can make it easier for borrowers to manage the repayment burden. This loan product also allows individuals to unlock the value of an otherwise immovable asset (their property) while retaining ownership, making it an effective financial tool. In essence, the purpose of LAP is to leverage the value of real estate to meet large, immediate financial needs while benefiting from lower interest rates and flexible repayment options.
Benefits of applying for a (LAP) Loan Against Property online
Understanding the LAP loan meaning and its benefits can help you evaluate how it can address financial needs. Here are the key advantages of taking out a loan against property:
1. Low rate of interest
Compared to unsecured loans, LAPs typically offer lower interest rates. This means you’ll pay reduced EMIs, easing your financial burden. The loan amount's interest rate depends on factors such as the property’s value, loan amount, and your credit score.
2. Longer repayment tenure
Loans against property offer repayment tenures of up to 15 years, allowing you to spread out payments over a longer period and reduce your monthly EMIs. Keep in mind that longer repayment periods may lead to higher interest payments. Use a LAP EMI calculator to plan accordingly.
3. Larger loan amount
You can borrow between 50-70% of your property’s current market value, depending on the lender. High-value properties offer the opportunity to access significant loan amounts to meet financial needs.
4. Quick and easy application process
Compared to other loan options, LAPs have a faster and simpler application process. Since LAPs are secured loans, lenders tend to have less stringent eligibility criteria. This allows quicker approvals at affordable rates.
How to Apply Online for Loan Against Property?
Step-by-step guide to apply for a loan against property
- Click on the 'APPLY' button on this page.
- Enter your pin code and click Proceed.
- Provide basic details like your full name and mobile number.
- Now select the type of loan that you wish to apply for, your net monthly income, your area pin code, and the required loan amount.
- Generate and submit your OTP to verify your phone number.
- Enter further details like your property location, your current EMI amount/ monthly obligation, and your PAN number.
- Click on the ‘SUBMIT’ button.
That is it! Your loan request is submitted. Our representative will connect with you and guide you through the next steps.
To apply for a loan against property easily and with minimal effort, apply online. Just fill in your personal details, provide your documents, and get your loan approved in no time.
*Conditions Apply.
Also read: How to apply for a loan against property: A step by step guide
Frequently asked questions
A Loan Against Property (LAP) can be availed by individuals who own residential, commercial, or industrial property. Typically, salaried individuals, self-employed professionals, and business owners can apply for LAP. Borrowers must be of legal age, usually between 25 to 85 years, depending on the lender’s policy. Additionally, they must have a stable source of income and a clear title to the property being pledged as collateral. The property should be free from any existing legal disputes or liabilities. Both individuals and businesses can apply for a LAP, provided they meet the lender's criteria regarding income, creditworthiness, and property valuation.
To avail a Loan Against Property (LAP), you need to submit several documents for verification. These typically include:
- Identity Proof: A government-issued document like a passport, Aadhaar card, voter ID, or driver’s license.
- Address Proof: Utility bills, ration card, or any other valid address verification document.
- Income Proof:
- Salaried Individuals: Salary slips for the last 3-6 months, Form 16, and bank statements.
- Self-Employed/Business Owners: IT returns, business financials, and profit and loss statements.
- Property Documents: Title deeds, sale agreement, and any other relevant legal documents proving ownership.
- Other Documents: PAN card, passport-sized photographs, and bank account statements for 6-12 months.
Some lenders may also request additional documents based on their policies or the loan amount applied for.
The maximum loan amount available under Loan Against Property (LAP) largely depends on the property's market value and the borrower's financial profile. Lenders generally offer loans up to 60-70% of the property’s value, known as the Loan-to-Value (LTV) ratio. For example, if the property is valued at Rs. 1 crore, the borrower can typically secure a loan of Rs. 60-70 lakh. However, the final loan amount also depends on factors like the borrower’s income, credit score, and the lender’s internal policies. Each lender may have its maximum cap, which can range from a few lakhs to several crores, depending on the borrower's profile and property type.
The full form of LAP is Loan Against Property. It refers to a secured loan where an individual can borrow money by pledging their residential, commercial, or land property as collateral.
A LAP loan is a secured loan, as it requires the borrower to pledge their property as collateral. The property remains with the lender until the entire loan amount is repaid.
Yes, a LAP loan can be used for business purposes, such as expanding operations, purchasing equipment, or managing working capital needs. It offers financial flexibility at lower interest rates.
Yes, you can apply for a LAP loan on a jointly owned property, provided all co-owners give consent. The loan amount depends on the property's market value and ownership agreement.
