Loan Against Property
Loan
WHAT IS LOAN AGAINST PROPERTY?
Loan against property is a secured loan that financial institutions provide against fully constructed, freehold residential and commercial properties. A mortgage loan can be availed for Personal and Business Needs (other than for speculative purposes) like marriage, medical expenses and child’s education etc. Existing Loan Against Property from other banks and financial institutions can also be transferred.
It’s All in the Name: Loan Against Property (LAP)
In the real estate and housing finance market today, we regularly come across the term “Home 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.