September 07, 2017
Loan Against Property (LAP), as the name implies is a loan extended against the mortgage of a property, commercial or residential as collateral for the loan.
A loan Against Property is different from an unsecured loan as in LAP the loan is taken by mortgaging the property (which acts as security) and an unsecured loan is taken without any security or guarantor.
A Loan against property (LAP) has comparatively lower interest rates than any other loan, since the collateral at hand is substantial enough to minimize all risk. This makes the LAP a secure loan. Such loans when used for business purposes, are used for expansion or/and meeting business credits or bonafide needs.
There are two main components in the eligibility criteria when you apply for a loan against property:
1. Income Of The Applicant: The qualifying cut varies across banks but minimum Net Annual Income is ₹3,00,000.
2. Ownership Of Applicant: The property must be in the name of the applicant. If the property is in co-ownership then the co-owners will be considered co-applicant of the loan. However, it is not compulsory for co-applicants to be the co-owners of the collateral property.
3. Age Of Applicant: This varies across banks but minimum age for application is 21 and upto 60 years at the time loan maturity.
4. Credit Health Of Applicant: This covers your income, savings, debt obligations, repayment track record for other loans, current liabilities, credit cards, etc
5. Recent Market Value Of The Property: Market value depends on the age and condition of the property. If the property is old and in a dilapidated condition, it will fetch lesser as compared to a newer or well maintained property.
Advantages of Loan Against Property
Use Potential Of Assets: assets like gold, FDs etc. are often used as collateral for loans. In LAP, a valuable asset like Real Estate is leveraged.
Low Interest Rate: The interest rate of LAP is far less than that of other loans. The tenure of the loan is generally longer (upto 15 years) as compared to personal loans (1-5years)
Processing Fee: The Processing fee for a LAP is also significantly lower as compared to other loans.
Value of loans is high: LAP provides loans almost as high as 70% of the price of the collateral in question
If you got a property of a decent value, you can ask for a significant loan against your property. At finansme.com, we focus at all the essential aspects related to LAP and help you understand the whole process at a single place.