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LAP - Loan Against Property Explained in Detail - IIFL Finance Blogs
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It All in the Name: Loan Against Property LAP
In the real estate and housing finance market today, we regularly come across the term ome Loan Against Property Loan against property is nothing but a loan which you avail by keeping your commercial/residential property as a collateral. Another name for Loan against property is a secured loan. The security in this kind of loan is the property owned by the person applying for the loan. The value of your property decides the amount of potential loan you will be sanctioned.
The types of Property against which LAP can be availed:
- Self-owned residential property
- Self-owned and self-occupied residential property
- Self-owned but rented residential property
- Self-owned piece of land
- Self-owned commercial property
- Self-owned but rented commercial property
Customers today avail loan against a property for numerous reasons. It could be anything from a foreign trip, big wedding, education of your children, or simply to expand your business. Purchasing a new property, renovating existing property, loan consolidation, balance transfer of existing HE/LAP and business or working capital requirement also from the bases of the need for a LAP.
Value of your property is not the only criteria for banks to decide whether you are eligible for a loan. It must be noted that as a standard practice, lending institutions generally sanction loans of approximately, 65% of the value of your property. The tenure offered in LAP is 15 years subject to age norms while the rate of interest varies between 12% to 16%.
They would often look into your income details, savings, employment track and other aspects before coming to disbursement. Your property or collateral would be evaluated on the current market value and correspondingly the loan amount would be calculated. Getting a LAP becomes much more streamlined and swift if you have all the basic documents in place. A quick check of the documents for LAP.
- KYC i.e. age and address proof.
- Income documents
- Ownership documents of property.
- Bank statements for the previous six months.
- A cheque for the processing fee.
- Others documents that may differ for each FI.
The Bottom Line: What is it that makes consumers go for Loan against Property when they have other options available The answer to this is subtle yet effective. The rate of interest is lower than personal loans making it one of the cheapest and pocket-friendly loans coming second only to home loans. The loan tenure of 15 years makes the EMI more comfortable and there is also the option of liquidating your money in the case of any big expense. The only drawback with LAP is that the bank may take possession of your property if you fail to repay the loan amount, however, a careful and planned approach should you see through quite smoothly.
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Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.
