Loan against property is the perfect way to unlock the hidden value of your property. LAP is designed to meet the financial needs of someone who already owns a house or multiple properties so as to get the best out of their assets. A loan against property can be taken as a business loan to grow your business, or to fund your children’s education, or meet wedding expenses or any other personal expenses. It is loan granted against the mortgage of property. The loan amount ranges from 50% to 75% of the valuation amount. Banks provide LAP for both Salaried as well as Self-Employed individuals. The rates and loan amounts differ based on your property and your annual income. Loan against property is a secured loan as the borrower guarantees that default, if any, can be compensated by his property. LAP is a better option compared to personal loan as the rate of interest is lesser in case of LAP (being a secured loan).The loan tenure can be up to 15 years and the interest ranges between 9.50% to 15%. Loan against property can be taken for various reasons:
- For business requirements i.e. for purchase of stock, machinery, expansion of business etc. or we can say to meet working capital requirements of business
- Closure of existing high-cost existing loans
- Purchase of commercial premise (office / shop) or land and / or industrial premise (office / shop) or land
- For Personal use might be for wedding of children, for their higher education etc.
- In debt consolidation
- Any other personal, professional needs
LAP can be classified as:
- Loan against residential property – this loan can be taken against your residential property that is self occupied, rented or vacant
- Loan against commercial property – this loan can be taken against commercial property that is self occupied, rented or vacant
- Loan against industrial property – this loan can be taken against industrial property that is self occupied, rented or vacant
- Loan against open land – this loan can be taken against open land which can be residential or commercial
- Balance transfer – this loan can be availed to reduce the ROI of current running loan by transferring it from the present financial institution
- Balance transfer and top up – this loan can be availed to reduce the ROI of current Documents required for applying for LAP are similar to that of Home Loan as mentioned in Home Loan Section.
- Running loan by transferring it from the present financial institution and also giving further enhancement on the takeover loan
- Top up – One can get an enhanced or additional amount from the existing financial institution on the running LAP
Criteria for eligibility of LAP are:
Criteria for eligible for LAP are similar to that of Home Loan as mentioned in Home Loan Section.
LAP/ Mortgage Loan Application Fees and Charges:
Mortgage Loan Lenders levy some fees and charges at the time of loan sanctioning which includes Processing Fees. Prepayment/ Foreclosure Charges: Prepayment fee comes in to play when one wants to prepay the loan before the end of the tenure. Different banks have different charges so one should take the time out to know them.
Mandatory Documents Required for Applying Mortgage Loan:
Mandatory documents required for LAP are similar to that of Home Loan as mentioned in Home Loan Section.