Loan Against Property

A loan against property is a secured loan that you can use for both personal and business purposes. You can pledge any commercial or residential property in your name as collateral even while you’re occupying it. Moreover, a loan against property has zero usage restrictions, which means you can use it to finance a variety of purposes like a wedding, a medical emergency, your child’s education, business expansion, family vacation, and much more. The property pledged as the security returns back to the owner once the loan has been repaid.

But before you proceed with your LAP application, make sure your property is legal and has all relevant government approvals. No financial institution will accept property built on illegal land as a mortgage.

Now, many people often confuse LAP with home loans. But the meaning of a LAP Loan and a home loan is different, and they serve different purposes.

What is LAP in a home loan?

The meaning of a Lap Loan and what it comprises can be better understood by what it brings to the table. Here are some benefits to taking out a loan against property.

1. Low rate of interest

While applying for a loan against property, interest rates are usually lower as compared to unsecured loans. As a result, you pay lower EMIs, which reduces your financial burden. Besides, the loan against property interest rate depends on factors like the value of the property, loan amount, your credit score, etc.

2. Longer repayment tenure

A loan taken against property can have a repayment tenure of up to 15 years. This means you can opt for longer loan tenure to reduce your EMIs. However, remember that longer repayment tenures also attract higher interest rates. You can use a loan against property EMI calculator to calculate your potential EMIs for the tenure you desire and choose accordingly.

3. Larger loan amount

Financial institutions will lend you a loan amount of up to 50-70 per cent of your property’s existing market value. Therefore, if you own a high-value property, you will be able to borrow a large amount of money against it.

4. A quick application process

Taking out a Loan against property is a fairly straightforward process, requiring much less time as compared to the alternatives. As LAP is a secured form of loan, lenders usually don’t follow a strict eligibility criterion to gauge your loan suitability. This means you can quickly get the loan at an affordable LAP rate.