All You Need to Know About Loan Against Property


Loan against property is one of the most convenient ways to finance personal expenses for business, education, home etc. Every property has a particular value based on its age, the locality in which it is situated, size, amenities etc. 

When you mortgage your property to any financial institution, they will grant you an amount based on its valuation for a particular tenor. During this period, the lender will have conditional ownership of the property until the entire loan amount is repaid in full by the borrower. 

A loan against property comes with no end-use restriction. Thus, you can conveniently use the borrowed amount to meet multifaceted requirements.

If you are looking forward to availing of a loan against property, here are some important points that you must learn to make an informed decision.

5 important things you must know about loan against property

Eligibility criteria

LAP loan eligibility criteria usually vary between different financial institutions. However, some common parameters are considered by all lenders. These include a borrower’s age, employment status, repayment history, financial standing, credit score, debts, savings and market value of the concerned mortgaged property. In fact, credit score affects loan against property eligibility immensely and must be equal to or above 750.

Loan to value ratio

A Loan against property usually comes with a high loan to value ratio. Most financial institutions may offer up to 90% of the property’s market value as a loan. However, this can vary and relies on several factors like the property’s condition, age and some specific internal policies. 

Interest rates

Loan against property interest rates are one of the crucial pointers to consider. Usually, the rate of interest rate can range between 9-15% per annum and vary according to different financial institutions. Some of the factors that affect rate of interest rate for loan against property are credit score, borrower profile, tenor and type of mortgaged property. 

Interest rates determine the affordability of the loan and your ability to repay it. Hence, it is always wise to compare and review the interest rates of various lenders to avoid future hassle. 

Documents required

There are some essential documents needed to apply for a loan against property, such as identity proof, proof of current residence, latest salary slips for salaried individuals and more. Proof of business ownership, including IT returns, balance sheets, etc., are necessary for self-employed individuals, along with bank statement of last few months. The application of loan against property will be approved only after the successful verification of all these documents.

Repayment tenor

Generally, the maximum repayment tenor of a LAP loan is 20 years. Several financial institutions also offer flexible repayment terms for borrower’s convenience. Also, there are pre-payment charges in case of partial and full pre-payment with respect to the rate of interest at which the loan was borrowed.

Borrowers should also seek pre-approved offers from reputed lenders, which streamline and accelerate the loan processing. These offers are available on a range of financial products, including loan against property and home loans. Check your pre-approved offers at any time by simply filling in your name and contact details.

Loan against property helps you to meet any unprecedented and emergency personal expenses conveniently. However it is also essential to apply for a credit from reliable institutions and be aware of loan features to make an informed decision for maximum benefits.


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