LOAN AGAINST PROPERTY (LAP)
A LAP is a Secured Finance Provided by a Bank or a Financial Institution against the Mortgage of customer’s asset or Property as collateral to the Bank/ Financial Institution.
Typically the banks and other lending institutions offer loan against residential, commercial and industrial property (Building / Plot)
The Loan amount can be used for Several Personal and Professional needs such as House renovation, Business expansion, Purchase of new Property, For Immediate working Capital in business, Investment in New technology for Business or Acquiring New machinery etc.
A Barrower usually get between 40-70% on LTV (Loan to Property Value) varies from one Bank to another Banks / Financial institution.
Key Facts about Loan against Property (LAP)
Loan against Property can be further understood with the below mentioned key facts:
| Loan Against Property Interest Rate | Starting from 8.50% |
| Loan to Value (LTV) | |
| Ranges from 60% to 70% | |
| LTV as per different property types: | |
| 1. Commercial property- 55-65% | |
| 2. Residential property-65-70% | |
| 3. Industrial property- 40-55% | |
| Loan Tenure | Flexible loan tenure up to 15 years depending on the age of the borrower |
| Processing Fee | Ranges from 0.50% to 1% of the loan amount |
| Loan Amount | |
| Minimum 3 Lakhs | |
| Maximum 100 Crores (Based on the type of property and loan purpose) | |
| Who can Apply? | |
| Salaried Individual | |
| Self-Employed Individual | |
| Professional | |
| NRI (Subject to documents verification) | |
| Prepayment of Loan | Prepayment could vary from 2-5% (Read loan sanction terms carefully) |
Eligibility Criteria for Loan against Property (LAP)
To obtain Loan against Property the borrower should fulfil the eligibility criteria. The following factors affect the loan eligibility of the borrower:
| Eligibility Factor | |
| Age | |
| Minimum 21 years (At the time of loan application) | |
| Maximum 65 years (At the time of loan maturity) | |
| However, the age may go up to 70 years and above in special cases. | |
| Job Experience or Business Stability | |
| Salaried Employees: Minimum of 2-3 years | |
| Self-Employed: Cash profit of at least 3 years | |
| Credit Score | Good Credit Score |
| (700 and above is usually acceptable) |
Documents required - salaried and self-employed
| DOCUMENTS | SALARIED | BUSINESS MAN |
| KYC | Photo | Photo |
| Pan | Pan | |
| Aadhar | Aadhar | |
| INCOME PROOF | Salary Slip – 3 months | ITR, Computation, P&L , Balance sheet- 3 Years |
| Bank statement-6months | Current Account statement – 6 months | |
| Form 16 / ITR – 3 Years | ||
| PROPERT DOCS. | Sale Deed, ROR – Patta | Sale Deed, ROR – Patta |
| EC – 30 Years with link deed | EC – 30 Years with link deed | |
| Rent receipt, Holding tax etc | Rent receipt, Holding tax etc | |
| Plan Approval with Map | Plan Approval with Map |