A Loan Against Property (LAP) is a secured loan that you can obtain by pledging your property as collateral. This asset can be land, a house, or commercial premises, with the loan amount sanctioned based on the property’s current market value. The property remains collateral until the loan is fully repaid. Due to its flexibility in usage, allowing funds for various financial needs, LAP has become a preferred option for debt consolidation over the years.
If you own commercial real estate like an industrial unit or office space, you can use it as collateral for a secured loan. Use these loans to expand your business, address emergencies, finance your children’s education, and fulfill other objectives. The current market value of your commercial property determines the loan amount you can obtain.
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This is one of the most popular types of loans against property. It is an ideal way to access funds in emergencies and for necessities. Applicants may take a loan against owned residential property for various reasons, such as consolidating other debts, home repairs or renovations, and other significant expenses or liabilities
Lease rental discounting is a term loan financing option that offers a loan against a rented property. Tenants can avail of this against a lease contract by showcasing their monthly rental receipts. Lenders assess your long-term cash flow and determine the loan amount based on the coverage of EMIs from the monthly rent received. This type of LAP allows you to access substantial loan amounts for essential purchases and emergencies, with easy repayment plans and foreclosure benefits.
Secured Line of Credit: Your immovable property or house serves as collateral for the loan amount advanced by the lender.
Recovery of Dues: If dues are not paid, the lending institution can sell the pledged property to recover its losses.
Easy Eligibility: The secured nature of LAP makes the eligibility criteria straightforward and interest rates nominal.
Loan Amount Calculation: Lenders determine the maximum loan amount based on the current market value of your property, but only a portion of this value is available as a loan.
Required Documentation: You must provide necessary property documents to avail of this type of credit.
No End-Use Restrictions: The principal amount can be used for any purpose without interference from the lender.
Faster Approval: Getting a LAP sanctioned is less time-consuming compared to unsecured loans due to the lower risk for lenders and fewer formalities required.
Lower Credit Score Acceptance: You can get a LAP sanctioned even with a lower credit score and use it as a starting point to rebuild your credit score.
Longer Repayment Tenure: LAPs offer longer repayment periods, up to 15 years, making it beneficial for high loan amounts.
Tax Deduction: Under Section 37(1) of the Income Tax Act, you can get a deduction for the interest paid if you use the LAP for business purposes.
No Usage Restrictions: There are no restrictions on the use of a LAP; it can be used for purchasing a house, renovations, education, or other personal expenses.
Competitive Interest Rates: LAPs typically have lower interest rates compared to other financing options like personal loans or credit cards.
There are numerous banking and non-banking financial institutions offering loans against property. Carefully research and compare these options to find a lender that meets your needs.
Assess the current market value of your property to understand how much loan you can avail against it.
Once you’ve selected a lender, review their eligibility criteria and gather the required documents needed for the loan application process.
If you meet the eligibility criteria, you can apply for the loan. Visit the lender’s website to fill out the loan application form and submit it along with the required documents. Alternatively, you can visit the nearest branch of the lender to complete this process in person.
You will need to furnish the following mortgage loan documents if you are a salaried employee:
Address proof
Income Tax returns
All documents related to the mortgaged property
PAN Card
Identity proof
Bank account statements for the previous three months
Salary slips
Property documents
If you own a business, you need to submit the following documents:
Address proof
Identity proof
All relevant documents of the mortgaged property
Form 60 or PAN card
Bank account statements for the previous 6 months
Property documents
Financial statements
IT returns
Keep in mind that these are the basic documents necessary to avail of LAP or Loan Against Property. Also note, some financial institutions may ask for additional paperwork.
Yes, you can apply for a Loan Against Property to finance education. Many banks and lending institutions offer lower interest rates when you provide valid fee receipts and necessary documents.
Your eligibility for a Loan Against Property is determined by factors such as your age, property value, income, current financial obligations, employment stability, and credit history.
Yes, you can get a loan against a property rented to a tenant. However, the terms and conditions may differ from those for residential properties.
To apply for a mortgage loan, salaried individuals need to provide documents such as an Aadhaar card, PAN card, latest pay slip, property documents, address proof, income tax returns for the last three years, and bank statements for the previous six months.
Now apply for a LAP online, All you need to do is provide your details below application form.
Our goal at Money Zaap is to provide access to Personal Loans, Business Loans, Car Loans, Home Loans, and Loans Against properties at very competitive interest rates.
