Loan against Property (LAP) is a secured loan which you can avail by mortgaging your property. Banks and financial institutions provide mortgage Loan against Property for residential, commercial property or land etc. It’s a secured loan i.e. in case of loan default; the bank can take over the property and use it to recover loan dues. However, the ownership of the property stays with you throughout the whole tenure. You can typically use or rent out the property, in case of loan against commercial property. Only if you cannot repay the loan, the bank can sell the property to settle its debts. In the case of joint ownership, all co-owners need to be co-applicants in the loan.
- The loan is approved on the basis of the mortgaged property.
- Are considered to be the cheapest loan products after home loans.
- Interest rates vary from 9.5-16 %
- The tenure is up to 15-20 years
- Bank decides the loan amount by taking the value of the property into consideration along with the repayment capacity of the applicant.
- No risk of default as there is security or collateral involved.
Most financial institutions have similar rules and parameters to check your loan against property eligibility depending on your repayment capacity (based on your annual income and past loans and other commitments) & proper legal and technical verification of the property against which a loan is to be sanctioned. It includes a physical visit to the property, ownership verification and valuation of property by a trusted value. Though all banks follow different norms the maximum loan amount one can avail is 60% of the property value.
Mortgage loan against property eligibility is evaluated on the following benchmarks:
- Income- must be a salaried or self-employed individual with a stable income source.
- Age- must be between 24-60 years.
- Credit score.
- Total assets and liabilities.
- No of dependants.
Documents Required for Loan against property:
- Occupancy Certificate.
- Approved Plan of the building.
- Share certificate copy.
- Past 13 years Chain of deeds.
- Nil Encumbrance Certificate – EC (if applicable).
- Current Sale agreement/ Draft Agreement to sell.
For salaried applicants:
- filled application form
- Identity, residence, age proof
- Last 6 months bank statement
- Last 3 months salary slip
- processing fee cheque
- form 16
For self-employed applicants:
- Proof of business existence
- Business profile
- Tax returns of the last 3 years for the existing business
- Last 3 years balance sheet, profit/loss account, CA certificates.
Fund your dreams using your property, whether you are looking to expand your business or need financial aid for personal reasons such as education, home improvement or wedding or other family occasions, LAP offers loan amount up to 10cr for the tenure of 15-20 years at lowest interest rates.
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